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Markets Charge Back From Brexit Panic

Published 07/17/2016, 01:07 AM
Updated 07/09/2023, 06:31 AM

Markets Charge Back from Brexit Panic - Central Bank Interference

10-Year U.S. Bond Yield

U.S. Interest Rates

  • Until around the 1930s, sterling was the senior currency.
  • During this period, US interest rates were off of the London market.
  • Whoever added the notes should have included that the highs were associated with secular highs in commodities.
  • Secular lows were set close to the end of the long contractions, as in 1847 and 1895.
  • The irony is that beginning in the late 1940s, the US Treasury started buying bonds to prevent yields from rising above 3 percent. In the 1960s “Operation Twist” was the program to aggressively buy bonds to prevent rates from increasing above 6 percent.
  • As with the end of any secular boom in commodities interest rates go up, and with failure interest rates go down.
  • Volcker just happened to be there when market forces reversed.

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