Nicole Elliott – Private investor and technical analyst – joined Zak Mir and Mike Ingram in the Tip TV studio to discuss what effect central bank policies have had on bond yields, as well as the benefits of keeping interest rates low.
Why the demand for 0 yield US treasury bonds?
With the US recently selling 21 billion 3 month T-bonds with a 0% yield, Elliott discussed the unusual circumstances that have made these attractive to investors. Despite central bank efforts to encourage investors to take on more risk, instead they’ve focused on “riskless” positions, says Elliott.
Stalling on the rate hike.
With interest rates being kept at 0 for the time being, Elliott discussed how this benefits both consumers and economies. From student loans, to car payments and mortgages, consumers have a lot of debt exposure, as do most companies as well as economies on the whole. By staying their hands on the rate hike, the Federal Reserve and other central banks have bought more time, however Elliott believes this is postponing the inevitable.
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