Will the 10 Year T-Bill Drop Below 0%?
Scott Minerd, Global Chief Investmetn Officer for Guggenheim wrote an article on March 2nd titled “A Drunk Man in the Snow.” In this article he acknowledges that the M2 money supply increase of 25% is driving inflation pressure higher and thus causing long-term rates on Treasuries and mortgages to rise. But, he also believes that any inflation we do see will be transitory just like Fed Chairman Powell. Here’s why.
“History tells us something different,” in that long-rates will drop in the next year as they did in 1983 and 2012. In fact, Guggenheim believes the 10 Year Treasury Bill will yield somewhere between 1% and a negative 2% with a likely rate of 0.5%. WOW! Last year the 10 Year T-Bill dropped to I believe to 0.35%, so this would be a drop of nearly 1% from those record lows. If the 10 Year T-Bill goes negative maybe we will see mortgage rates in the 1’s. Thus, go ahead and buy your new home today and refinance it next year if rates do drop; but lock in today’s lower prices.