One thing I constantly hear is “interest rates only have one direction to go – UP!” There’s this myth that t-bond yields and interest rates in general just have to go higher. But history does not prove this at all. In fact, history tells quite a different story.
The chart below helps put things in perspective. Since 1871 US Treasury Bond yields have averaged 4.3%. Today’s rates of 2.8% are certainly lower than that, but not at record lows. We’re still about 1% off those levels seen at several points in the past 125 years.