Can Rates Go Any Lower?

Rates can go even lower than they are now. In some European and Asian nations, negative yields have prevailed for years.

(Image credit: franckreporter)

How many times have you heard that interest rates can’t go any lower? And yet they do. Lower and lower and, maybe soon, to zero or below. In fact, ever since 1981, when the yield on the 10-year Treasury bond peaked at 15.2%, government debt has been in a long-term bull market. With the exception of a few upward blips, interest rates have fallen consistently, with the yield on 10-year Treasuries dipping below 1% for the first time ever in early March. That means prices of outstanding bonds, which move in the opposite direction of yields, have been rising.

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James K. Glassman
Contributing Columnist, Kiplinger's Personal Finance
James K. Glassman is a visiting fellow at the American Enterprise Institute. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.