It’s not very often that you hear it, even outside of Utah County. Analysts hesitate to mention “it-which-must-not-be named” and traders tremble at the very thought: DEFLATION. All around the globe, and especially in Europe at the moment, the D-word is rearing it’s fabled head. The German 10 year bond currently has a yield of 1.0%, the lowest return in over 100 years. The U.S. 10 year has fallen to 2.38% this week, and is expected to decline further in weeks to come. One might conclude that the cause is media fear-mongering or an overreaction by equities investors cashing out of record-high-priced stocks. Rather than playing the blame game, I think that is beneficial to establish that when societies lose faith in the system, the result is the devaluation of that system and prices fall.
And that means that lower interest rates could be on the horizon.