US Treasury Yields - Wake Up Call

The Chart below should serve as a wake up call for all those who believe that the World Economy is on the mend. For the past three years, we have been pointing out that the worst is yet to come.

Since 2008, some of us have fondly nurtured the hope that a sustainable recovery is just round the corner. Unfortunately, the world economy seems to be taking the wrong turn all the time. The bond markets think we are far from a sustainable recovery. The US Treasury Yields are lower than they were in 1900 and as low as they were during the depths of the Great Depression. The yields seem to indicate that despite various "pundits" calling bonds a bubble, they are not about to bottom out anytime soon. 

Probably, time the more rational individuals prepare for the worst. But, the good news is that the Central banks have a bit more ammunition left - in the form of QE3 and QE4. It is unlikely that we will see any improvement in the economy in the next three to four years (except for a semblance of recovery with another bout of QE3 and QE4, but they are likely to be temporary. Unless Greece exits the Euro in the next few weeks, we could see a semblance of recovery from early next year, which could last into the winter of 2013. The best thing to do: Conserve cash.