Al Charlson is a North Central Iowa farm kid, lifelong Iowan, and retired bank trust officer. The Waverly Democrat published a version of this commentary on February 6.
Old habits die hard. While many of my neighbors are checking sports scores, I’m checking the U.S. Treasury yield curve. (OK – I do follow the Cyclones closely.) Even though I’m no longer actively managing investments, I’m still interested in the economy. Over time I’ve learned that the bond market is a more focused and rational indicator of current and developing economic conditions than the stock markets.
The Treasury yield curve is simply a graph of the current interest yield on U.S. Treasury debt over a range of maturities from overnight Fed funds to 30-year bonds. The Federal Reserve sets the Fed funds rate. Longer term rates are determined by market supply and demand. Bond market watchers generally focus on the 2-year to 10-year sector of the curve.
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