Bond Markets are the Judge, Earnings: MFC, ALA, ALC, PEY, Preferred Shares Recommendations
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The connection between the level of interest rates and asset values was obvious last week as markets moved lower in response to rising bond yields. Not as obvious, but equally influential is the impact of technology on interest rates and asset values.
Accelerating technological advancements have been a major factor driving economic growth since the mid 1980's. This is when the first Apple computer arrived on the desktop. This is not to say that interest rates will not still be volatile in response to events, just that volatility will be considerably lower and the peak for interest rates much lower than in the past.
The recent attention-getting uptick for bond yields around the world is acknowledgement that interest rates still matter. US government debt levels are high, but going forward much depends on whoever is in Washington and their policies to control government spending. The 2018 annual deficit is not, historically speaking all that outlandish, providing the economy can grow and governments can manage spending going forward.
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