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News Link • Government Debt & Financing

Retiring Boomer Hell: Demographics Predict 10%+ On The 10 Year?

Courtesy of GTAA's latest fixed income update, we wanted to present a curious chart which looks at the correlation between US social demographics (in this case, the ratio of retirees to savers) and the 10 year yield. As the chart demonstrates, the two data series have a strong correlation of 0.91 since 1960, and based on predicted social dynamics, corroborated by various independent budgeting organizations, the demographic ratio is expected to continue growing at the current rate and hit highs last seen in 1981. The obvious question: does this mean that the 10 year, now once again close to all time record low yields, will follow through and revert to 1980 Paul Volcker levels, or will the Fed attempt to offset not only the impact of the business cycle and record systemic leverage, but also take on nature and aging directly?

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