Quarterly Review and Outlook - First Quarter 2015

It is interesting to note that in this period of slower growth and lower inflation, long-term Treasury bond yields did rise for short periods as inflationary psychology shifted higher. However, the slow growth meant that the economy was too weak to withstand higher interest rates, and the result was a shift to lower rate levels as the economy slowed. Since the U.S. economy entered the excessive debt range, eight episodes have occurred in which this yield gained 84 basis points or more.

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