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Members of D.A. Davidson & Co.

Rising Rates Are Not a Foregone Conclusion

"Rising rates are not a foregone conclusion. History tells us that every recession is followed by a trough in interest rates several quarters later. 


... As the money continues to flood into the private sector we continue to see a rise in stock and bond prices. Over time, as stimulus payments and tax refunds are distributed and more money looks to be put to work, investors will extend maturities on their bond portfolios in a “reach for yield.” 


Against this backdrop, 2-year Treasury note yields could go to 1 bp or lower and 5-year Treasury notes could easily reach 10 bps. These levels would put downward pressure on 10-year Treasury rates, likely rendering the current yield unsustainable. ... At the end of the day, taking on duration risk to get any reasonable return on cash will prove a temptation too great to resist."


(Global CIO Outlook, The Random Walk of Interest Rates dated March 2, 2021 by Scott Minerd, Global Chief Investment Officer &  Chairman of Investments, with Guggenheim Partners, LLC)


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