Interest Rates Slowly Creep Higher

Well the 10 year treasury has spent the whole month of July in he 2.80’s% and we would not be surprised to see the trend continue, although rates are trading at the 2.88% level right now.

I think it is becoming pretty obvious that interest rates in the U.S. will stay fairly low–until they don’t. As silly as this sounds when you are competing against foreign securities that are essentially still yielding nothing certainly there should be reasonable demand. I mean the German 30 year is at 1.01%–who the heck wants to lock in 30 years for 1%?

As we mentioned on Monday individual economic news items used to have the power to move markets, but that seems to no longer be the case. Yesterday we had housing numbers that were really lousy–no huge surprise. It isn’t interest rates, but when there is very little in the way of wage increases for a large chuck of the population something has to give. If the “haves” want to build a new custom house they need to sell their current house–a typical buyer being the “have nots”. Housing prices are too high for many to purchase–in spite of high employment and solid consumer spending paying $180,000 for a small 1,300sf rambler in our little town is out of reach for most folks. We believe that generally speaking housing prices have peaked–not everywhere likely, but in the midwest.

The Philly Fed manufacturing report today came in very strong–the overall economy is still ramping up a bit. The Philly Fed report also showed a good bit of inflation—and inflation as measured by the CPI is one item that could move markets. Thus far CPI has been tame and may well continue to be tame, but a surprise 3% year over year print would throw markets (equity and bonds) for a loop.

For now we continue to sit back and collect dividends and interest since we are so busy at our ‘real work’ that we have no choice. We look forward to January when I have decided to start drawing my social security (and Medicare in November) and will have the option to do what I love (writing and publishing) instead of what I feel I have to do given the cost of our health insurance.

13 thoughts on “Interest Rates Slowly Creep Higher”

  1. Congrats Tim on deciding to move to the next stage. My wife and I are newbies too. We like to say we have “graduated from working”. I start Medicare on August 1, so that should be a new experience. I have to say we have had a great deal of fun the past couple years. I was used to getting up at zero dark30 so to wake up in the morning without an alarm clock is quite nice. Enjoy.

  2. Tim, congrats on your pending “retirement”. Glad to see you recognize you are a type A person and will continue on with a meaningful and satisfying activity once retired. I am more a type B meaning I golf and sit up in the peanut gallery on financial websites, lol. But I did get dragged into a little more easy braindead part time job too, because I am addicted to contributing yearly to my Roth since they habe this dumb law that wont allow me to contribute pension income into my Roth, ha.

  3. Tim. Assuming you turn 65 this november have you thought of filing a restricted application allowing your SS benefit to grow while you have your wife collect hers and at your full FRA you then get half of her full check while yours grows 8%+ a year ? As the higherearner I chose that path and so far so good

  4. Tim
    Congratulations on the ‘retirement’ news.
    It’s so much better to begin the day asking what would I like to do vs. what do I have to do.

  5. This is off topic but does anyone know why APO-A (today at $25.50) trades higher than APO-B (today $24.98) when they appear, at least according to quantumonline, to be identical? A month or so ago I sold the A’s and bought the B’s thinking it would catch up, but hasn’t done so yet.

  6. Kudos, Tim. There’s nothing quite like laying around, collecting Social Security and Medicare…lol. I’ve been doing it since I retired 4 short years ago. That’s why I’m always gravitating toward safer, income producing investments. I found, however, that’s it’s not a bad idea to keep a very small percentage of my bankroll for riskier investments and trading. Otherwise, it gets too boring.

    1. Hi Charles—my plan is to operate this website full time–can’t hardly wait. I have my tech people on a retainer and they send me messages wanting to know what to do next–unfortunately with my ‘real job’ I can’t even sit down with them and outline all the changes. Yes–I am very conservative with investments–although I fall off the wagon on occasion.

  7. Tim, Good for you re drawing on SS and equally important Medicare.. After 40 years working for IBM I retired in 2016. A couple of years before I wanted but didn’t have much of a viable option to stay. I turned 64 this past June and trying to hold off until 66 to apply for SS.. BUT, my wife got laid off earlier this year so now I’m trying to hold out until 65 for SS and roll into Medicare.. I’ve become quite conservative in my investment style over the years.. not the younger “nothing can hurt me” attitude I use to have. Too much responsibilities and too many bills.. sound familiar? Best to you and all of us in the fast approaching 2019..

    1. Hi Rick–I have a taste for what you are dealing with–both my wife and I being corporate refugees from Pillsbury (now General Mills). We both started drawing pensions at 55. I had intended to draw SS sooner, but I could afford to with the cost of health insurance, but am looking forward to January.

    1. Thanks DaveR. I am keeping my fingers crossed that the plan works out. I turn ‘full’ retirement age next year so can afford to keep working a little without being penalized.

      1. Congrats Tim…I’ve enjoyed the ‘little island of sanity’ you’ve created here and learned a few things along the way also. Can only imagine it getting better when you have more time to devote to it.

        As for deciding whether to retire early…there is a website called that’s worth a look. H/t goes to Gridbird for mentioning it a while ago.

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