10-Year Treasury Yields

What will happen in the next 10 years? Lower bond yields (higher bond prices)? Probably not.


- The US 10 year Treasury yields fell to a 220 year low of 1.45% in June 2012.
- US bonds have had the following distinct secular bull and bear markets:
- 1790-1902: erratic yield fluctuations and then a sustained decline in yields to below 3%.
- 1902-1920: the First Bear Bond Market, yields rise from 3% to 5-6%.
- 1920-1946: the Great Bull Bond Market, yields decline from 5-6% to below 2%.
- 1946-1981: the Second Bear Bond Market, yields soar from 2% to above 15% during 1981.
- 1981-today: the Greatest Bull Bond Market, as yields tumble from 15% to 1.5% today.

Source: Bank of America Merrill Lynch, June 2012.

Coming Soon to a City Near You

Recipe for municipal default:

Unrealistic benefits for public workers + housing crisis (lower property taxes) + economic crisis (lower income taxes) + years of wasteful spending + fraudulent accounting = Best of luck (especially you, Californians).


Cities on the brink:
Stockton, CA
Detroit, MI
Mammoth Lakes, CA
San Bernadino, CA
Compton, CA

Get ready for less police/fire, higher crime (unless you believe crime goes down in economic downturns with less police on patrol), more traffic tickets, less public services ...

Source: http://www.zerohedge.com/news/gathering-pace-muni-fails
Source: http://www.latimes.com/news/local/la-me-0719-compton-bankruptcy-20120719,0,7289469.story
Source: http://www.sfexaminer.com/opinion/editorials/2012/07/stockton-cautionary-tale-california
Source: http://latimesblogs.latimes.com/lanow/2012/07/mammoth-lakes-bankruptcy.html
Source: http://www.reuters.com/article/2012/07/03/us-stockton-bankruptcy-cause-idUSBRE8621DL20120703

China Panics, US "Recovers" and Germany Flinches

July 9:



Source: http://www.youtube.com/watch?feature=player_embedded&v=wJ-l1LIdWOU#!
Source: http://www.zerohedge.com/news/between-german-rock-and-global-hard-place