WEBVTT

00:01.950 --> 00:03.420
In the fixed income markets,

00:03.480 --> 00:08.340
no security is watched more closely
or analyzed more intensely than the

00:08.340 --> 00:09.810
10 year U.S. Treasury Note.

00:10.770 --> 00:14.220
Tens of billions of 10-year notes
trade on average every business day.

00:15.090 --> 00:19.230
Trillions of dollars of corporate and
mortgage-backed securities are priced

00:19.620 --> 00:21.150
based on the yield of the 10-year.

00:22.110 --> 00:24.750
When 10-year yields rise
over an extended period,

00:25.200 --> 00:29.310
it signals continuing economic booms
and bullish investor sentiment.

00:30.570 --> 00:35.040
Falling 10-year yields over an extended
period portend looming economic

00:35.040 --> 00:37.800
busts, financial or political crises,

00:38.160 --> 00:41.640
and investor flight to quality trades.

00:41.640 --> 00:44.610
Investors and traders from
Tokyo to Toronto to Toledo

00:45.180 --> 00:49.830
gain and lose small fortunes betting
on every trade tick of the U.S 10-year.

00:51.030 --> 00:55.050
Today, the yield on the
U.S. 10-year is 3.23%.

00:55.980 --> 00:59.190
Twelve months ago, the yield was 2.35%,

01:00.090 --> 01:02.280
and in July 2016,

01:02.790 --> 01:07.260
it recorded its all-time
low yield of 1.35%.

01:08.280 --> 01:11.430
When the yield broke above
3% earlier this year,

01:11.910 --> 01:16.800
it was headline news. Now that
the yield has settled in above 3%,

01:17.190 --> 01:18.660
few people are batting an eye.

01:19.740 --> 01:23.490
The Fed is eight quarter-point
increases into a tightening cycle.

01:24.180 --> 01:27.960
The economy expanded 4.2% at last reading,

01:28.620 --> 01:33.390
and there is enough fiscal and monetary
stimulus in the economy to drive growth

01:33.840 --> 01:36.720
for the foreseeable future.

01:36.720 --> 01:39.180
Looking over the period beginning in 1990,

01:39.660 --> 01:43.170
the average yield on the
U.S. 10-year is 4.6%.

01:44.010 --> 01:48.510
We expect 3% to be the new bottom
as rates move from emergency

01:48.510 --> 01:50.820
levels to more normalized levels.

01:51.870 --> 01:55.320
For more information on interest
rates and financial markets,

01:55.500 --> 01:58.170
check out the latest
edition of the Canso Market

01:58.170 --> 02:03.060
Observer at www.cansofunds.com.
We look forward to your comments.

02:03.360 --> 02:04.290
Thank you very much.