Sunday, December 6, 2020

US 10 year Interest Rate Yield close to 1%, take care

Since covid started, mid March, all countries around the world had maximize the debt to GDP ratio, to be able to pay for those stimulus checks, more debt was issued, country debt was generated.

The US 10 year yield was around 1.5% at that time, mid february or so, and it dropped directly to 0.5% after the world has stopped instantly due to covid in march 2020. The yield was moving between 0.6 and 0.5 from march till september, and from that month is going up slowly, having it around 1%.

Why is it going up?
It can be that the world is expecting a high inflation or inflation in goods and services, because of all the money that has been printed or the expansion of the economy that they were forced to execute

I`m thinking also that it is also possible because the central banks started to underload their purchases, and they are buying less, on a slowly pace, in order to keep the yield on the same rate as it was in the covid. If this is the case, when yield goes up, some people, funds and so on, could change from stock market investments to bonds, pressing the stock market drop (but this still does not show up, we had the best november in terms of rentability)

Apart from that, if interest rates goes up, the actual over debted countries will be forced to pay more interest, and will have more difficulties to pay their interest requirements. Perhaps, some country will suffer paying that debt interest, if the interest of all countries move higher.

In Europe, Italy at least has already ask to pardon for the debt generated during the covid. I don´t think the rest of European countries will accept it, but it is alarming that a big european country is asking for it

The USD is lossing power against the rest of the currencies, at least the Euro. It has dropped from around 1.08 to 1.21. So, I don´t know the reason for it, because because if central bank would be buying more debt, I suppose currency would drop as well as interest rates (but thats not the case, so I`m confused).

The SP500 has done well finally in 2020, it is up for more than 10% even though there was a big pandemic in the world. 

What could happen in stock market if interest goes up more?

What could happen if some medium country declares debt default?

What could happen if USD strenghtens quickly to 1.08?

What could happen if all the stimulus checks cannot be paid? in United States and all around the globe. European countries has also provide huge stimulus checks to unemployed people due to covid


Many uncertainties and many unknowns about the market future trend.

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