16 Feb 2022
US Interest Rates: How high can rates go?
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
The US 10 year bond yield has moved up from 0.54% in March 2020 to the current 1.98% which is a big percentage change.
However it remains difficult to see US 10 year bond yield rising back up to 4.00% quickly given that US debt passed US$30 trillion in January 2022 and World debt is fast approaching US$300 trillion.
Click for chart.
Put simply, the World is awash with debt, that is the elephant in the room and to take the US 10 year bond yield back up to 4.00% quickly would collapse prices for both growth assets and defensive assets.
As Benjamin Graham taught, remain invested according to your appetite for volatility and if bond yields do explode upwards causing fear and panic to take hold, then react by buying more quality assets at discounted prices.
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