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Tuesday, April 18, 2017

What's happening to USA bond yields?

The 10-year USA bond yield has fallen to 2.26% because of geopolitical reasons in Syria & NK.

A low bond yield is bad for the economy because it will denote that the economy is not growing and fixed-income investments will have very lousy rates of returns because the returns are eroded by inflations.

Gold is also affected by geopolitical reasons.

http://finance.yahoo.com/news/gold-hits-five-month-high-042918105.html

Can you imagine an inflation of 2% and 10-year bond yield at 2% too? This would mean that fixed-income return would be negative after costs.  When fixed-income investments are losing money, consumer spendings will be greatly affected and a vicious cycle will develop that will cause recession.

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