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At the end of March the yield on the ten-year T-note closed at 3.833%, up from 3.617% the month before. Note that at the end of March last year the yield stood at 2.67%. To assess where yields are heading, one needs to identify the key factors that drive interest rates. Following the writings of great economic masters such as Carl Menger and

“Bailing out Greece is not going to reduce the threat of another economic crisis.” On April 27 the Standard & Poor’s rating agency downgraded the Greek government’s debt to junk status. Greece has been graded BB+ by the S&P, official “junk” territory. It is now on a par with Azerbaijan, Colombia, Panama, and Romania. The cost of Greek borrowing on

On Monday, May 10, eurozone officials presented a stimulus plan involving $1 trillion. The main reason for the package, as stated by officials, is to prevent European economies from falling into an economic black hole on account of the economic crisis in Greece. Another factor that prompted the European leaders to come up with the massive stimulus

According to some analysts, a sharp decline in major commodity-price indexes has raised the specter of deflation. The Journal of Commerce’s index ( JCOM ) fell by 8.5% in May from April while the Commodity Research Bureau’s index ( CRB ) fell by 8.2% during that period. Also the growth momentum of these indexes plunged in May. The yearly rate of

Some Fed officials and various commentators, such as Professor Paul Krugman , are of the view that the US central bank should be ready to consider additional steps to boost the US economy in the wake of a visible softening in key economic data. For instance, the yearly rate of growth of retail sales, after climbing to 8.5% in March, have fallen to

On Friday, July 30, the St. Louis Federal Reserve Bank president, James Bullard, speaking on CNBC television, said that the Fed must weigh medium-term inflation risks against near-term deflation risks. For most economists and commentators, a general fall in prices, which they label deflation, is a terrible thing. They hold that a fall in prices

Despite the massive fiscal stimulus package of nearly $800 billion approved by Congress early last year and trillions of dollars pumped by the Fed, the rally in various key economic data seems to be coming to an end. After falling to 32.5 in December 2008, the ISM manufacturing index peaked at 60.4 in April of this this year. In August the index

Most experts are almost unanimous that the key to economic recovery is a reduction in the unemployment rate, which stood at 9.6% in August. The number of unemployed stood in August at almost 15 million. Also, the underemployment rate climbed to 16.7% in August from 16.5% in the month before. But does it make sense that the key to economic growth

On September 20, 2010, the National Bureau of Economic Research (NBER), the institution that dates the peaks and troughs of business cycles, pronounced that the US recession ended on June 2009. This conclusion is based on scrutiny of key economic-activity data such as real gross domestic product (GDP) and real gross domestic income (GDI), which

In its September 21 meeting, the Federal Reserve Open Market Committee expressed concern that the rate of inflation is far too low. According to the minutes some members of the FOMC have said, that unless the pace of economic recovery strengthened or underlying inflation moved back toward a level consistent with the Committee’s mandate, they would