Economic News Blog
Posted by: Steven Kline, Jr. 27. April 2016

Real 10-Yr Treasury Rate under 1.5 Percent

(Positive) The real 10-year treasury rate was 1.49 percent in March 2016. This was the second lowest level for the real rate since May 2015, and it was the second month in a row that the real rate was below 1.5 percent. Since the Fed has announced it was raising its overnight rate, the real 10-year treasury rate has dropped each of the last four months. Apparently, the market does not see things the same way as the Fed. The change in the real 10-year treasury rate decreased for the third consecutive month, indicating the rate of increase in interest rates compared with one year ago is slowing down. The change in rates was at its slowest rate since June 2015.

The 10-year treasury rate is good leading indicator of the money supply, housing permits, consutrction spending, and consumer durable goods spending. A falling real interest rate should lead to more housing permits, construction spending, and consumer durable goods spending. This means that the real 10-year treasury rate is now a positive leading indicator for capital spending. 

The real 10-year treasury rate rate is an important leading indicator for the following industries: appliancesautomotivecustom processorsfurniture manufacturinghardwareHVACmetalcutting job shopsoff-road/construction machinerypetrochemical processorsplastics/rubberpumps/valves/plumbing productstextiles/clothing/leather goods; and wood/paper.

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