The most important question for investors at this time is to determine how high interest rates will rise; if indeed the Fed’s artificial suppression of yields is truly about to end. To accomplish this we first must consider where yields were last outside of central bank debt monetization, a recession and the Eurozone debt crisis. Then, we need to factor in the increased risks to inflation and solvency, in order to arrive at an appropriate estimation for the level of interest rates during 2014.
The last time there was; no QE session, no flight to safety in U.S. Treasuries from European debt insolvency, and the economy was not contracting, was in the spring of 2010.
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