The long-term trend line is still intact for long-term yields. This higher interest is the last thing the US economy can afford, as you would have the combination of higher commodities prices, higher interest rates, decelerating credit growth, and falling asset values that is toxic to economic growth. This combination is a tsunami of future debt deflation counter to inflation fears around the world
On that note, I get quite a bit of emails that inflation is in our future, the point to the shadow statistics numbers. I agree with these numbers, inflation is probably much higher that the governments would let us know. However, I ask the question, if rates were really reported then the bond market would have taken off which would have not allowed the Real Estate market to blow off which would have not brought us where we are today...
I suggest that you look at Asia in the 1997-1998 periods where inflation numbers collapsed within a year… I would suggest that this would be the case as the global recession spreads... Real Estate is a lagging indicator, so is inflation so is the commodities blow-off... Do you really believe the economy can grow at all if we get another move of over 20-30% in commodities and or interest rates?
Checkmate for the global economy.
