Market yields on U.S. government debt fell on Thursday for the third day in a row, adding credibility to our prediction that interest rates in the U.S. economy are close to their peak.
The only exceptions were at the short end of maturities: the 1- month, 2-month and 3-month all paid more at the closing of Thursday's market than they did yesterday. All others fell:
Table 1
Source: U.S. Treasury
While U.S. rates are likely approaching their peak for now, rates in Europe will increase as a result of today's decision by the European Central Bank to raise its lead interest rates by 0.75 percentage points. Those rates now span from 1.5 percent to 2.25 percent.
The ECB motivates its rate hike—the third in a row—with persistent and rising inflation. While U.S. consumer-price inflation has declined over the past two months, euro-zone consumer prices continue to rise at an accelerating pace. The September inflation rate of 9.9 percent was well above the 9.1 percent recorded in August.
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We do not give investment advice.
This blog provides analytical information solely for the purposes of 1) predicting the cost of the federal debt, and 2) for assessing the risk for a U.S. fiscal crisis. All information published here, forecasting and other, is based on publicly available data from the U.S. Treasury, including but not limited to approximately 65 percent of the current debt; on macroeconomic data, including but not limited to monetary policy decisions by the Federal Reserve; and on macroeconomic theory.
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