Or maybe the title could be… “Why aren’t we buying bonds?” I could give several lengthy explanations, all of which would center on the problem of government intervention in free markets. It’s enough to know that our trendfollowing model works in spite of the government. That being said, we’ll start with a simple look at historic interest rates. The Federal Funds rate is the overnight lending rate between banks and essentially the base rate for all fixed income price models before the various risk premia are included. Knowing that most eyes will glaze over as I use industry language, I’ll keep this very short and simple. The lower the overnight lending rate is… the lower every other form of interest will be as well.
A great discussion from the Von Mises Institute to help further your economic education. This particular talk centers around some of the false economic arguments made by our current political candidates.