No matter what happens, there always seems to be a catastrophe looming – at least in the minds of the financial media.
Now one of the big stories is the “exodus” from bond funds. The bond market has taken a hit this year with bond yields creeping up. The 10 year US treasury yield is now just under 3%.
The financial media is shouting about concerns of higher yields. Will it cripple the economy? Will bond prices continue to drop?
Weren’t these the same people who were claiming low yields on bonds were a huge problem? Aren’t these the same people who, a year ago, were saying that low interest rates could lead to asset bubbles and higher interest rates would be “healthy.”
As I wrote in an earlier post, this year has gone quite well so far. Yields are creeping up, and the stock market is up quite a bit. The primary reason bond yields are increasing….unemployment is coming down. Plus the US is outperforming most foreign markets.
Basically the financial media will be unhappy with the current state of things no matter what. If you listen to them, you will always feel like a boogeyman is around the corner. This is not a good way to go about making serious investment decisions.
Up is bad, but down is bad too ??!!
If bond yields go up, then the economy may be threatened. If bond yields go down, this is market manipulation.
If unemployment goes up, this is a sign of a weak economy. If unemployment goes down, this may trigger the threat of higher interest rates.
If the foreign markets are doing better than the US, then the US is an economic basket case. If the US is outperforming, then there is major concern over the health of foreign markets.
They even do this with their philosophical stance on the Fed. If the Fed is in control of rates, then this is centralized planning. But if the Fed is losing control of interest rates….that may be a financial apocalypse.
I think the financial media might finally be placated if stocks returned exactly 9% per year with absolutely no volatility, and inflation was exactly 2.5% per year, unchanging each quarter. Foreign markets would get identical returns, and there would be no currency risk at all.
Just one more reason not to listen to anything the financial media says. I would estimate about 1% of the material the financial media writes is actually good information, but it is simply not practical for a non-professional to be able to separate the good from the bad.