Chapter 10 Charts: Predicting Bonds

Predicting the Markets: Chapter 10 Charts: Predicting Bonds

Yardeni Research, Inc.

December 31, 2021

Dr. Edward Yardeni

Chief Investment Strategist

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Table Of Contents Table Of Contents

Predicting Bonds

1-27

December 31, 2021 / Chapter 10 Charts: Predicting Bonds

Yardeni Research, Inc.



Predicting Bonds

Figure 1.

18

18

US TREASURY 10-YEAR BOND YIELD: 1965-1989

(percent, daily)

15.84

9/30/81

16

16

13.99

5/30/84

14

14

12

12

10.23 10/16/87

10

10

10.12

5/4/83

8

8

6

6

5.38

3/23/71 4

4

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

Source: Federal Reserve Board.

Figure 2.

18

18

US CONSUMER PRICE INDEX: 1965-1989

(yearly percent change, monthly)

16

14.8

16

3/80

14

12.3

14

12/74

12

12

10

10

8

6

2.7

6/72

4

8 2.5 7/83

4.8

6

3/84

1.1

12/86

4

2

2



0

0

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

Source: Bureau of Labor Statistics.

Page 1 / December 31, 2021 / Chapter 10 Charts: Predicting Bonds

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Predicting Bonds

Figure 3.

22

22

FEDERAL FUNDS RATE: 1965-1989

(percent, weekly)

20

20

18

18

16

16

14

14

12

12

10

10

8

8

6

6

4

4



2

2

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

Source: Federal Reserve Board.

Figure 4.

22

22

US BANK PRIME LOAN RATE: 1965-1989

(percent, weekly)

20

20

18

18

16

16

14

14

12

12

10

10

8

8

6

6



4

4

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

Source: Federal Reserve Board.

Page 2 / December 31, 2021 / Chapter 10 Charts: Predicting Bonds

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Predicting Bonds

Figure 5.

12

US UNEMPLOYMENT RATE: 1965-1989 (percent, monthly)

11

12

10.8

12/82

11

10

10

9.0

5/75

9

9

8

8

7

6.1

5.6

8/71

5/79

6

4.6

10/73

5

3.4

4

5/69

7 5.0 6 3/89

5 4



3

3

65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89

Source: Bureau of Labor Statistics.

Figure 6.

9.5

9.5

REAL GDP: 1965-1989

9.0 (trillion 2012 dollars, saar, quarterly, ratio scale)

9.0

8.5

8.5

8.0

8.0

7.5

7.5

7.0

7.0

6.5

6.5

6.0

6.0

5.5

5.5

5.0

5.0

4.5

4.5

4.0

4.0



3.5

3.5

65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89

Source: Bureau of Economic Analysis.

Page 3 / December 31, 2021 / Chapter 10 Charts: Predicting Bonds

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Predicting Bonds

Figure 7.

18

US TREASURY BOND YIELD & NOMINAL GDP GROWTH

16

14

12

10

18

16

US Treasury 10-Year

Bond Yield

14

(percent)

Nominal GDP

12

(yearly percent change)

Q3

10

8

8

6

6

4

4

2

Dec

2

0

0

-2

-2

-4

-4

-6

-6

-8

-8

-10

-10



-12

-12

53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25 27

Source: Bureau of Economic Analysis and Federal Reserve Board.

Figure 8.

12

12

SPREAD BETWEEN US TREASURY BOND YIELD & NOMINAL GDP GROWTH*

10 (percentage points)

10

8

8

6

6

4

4

2

2

0

0

-2

-2

-4

-4

-6

-6

-8

Q3

-8

-10

-10

-12

-12

-14

-14



-16

-16

53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25 27

* US Treasury 10-year bond yield minus yearly percent change in nominal GDP. Source: Bureau of Economic Analysis and Federal Reserve Board.

Page 4 / December 31, 2021 / Chapter 10 Charts: Predicting Bonds

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Predicting Bonds

Figure 9.

62

62

58

WEST TEXAS INTERMEDIATE CRUDE OIL PRICE: 1980-2000

58

54

(dollars per barrel, monthly, ratio scale)

54

50

50

46

46

42

42

38

38

34

34

30

30

26

26

22

22

18

18

14

14



10

10

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Note: Shaded areas denote recessions according to the National Bureau of Economic Research. Source: Haver Analytics.

Figure 10.

2.5

2.5

HOUSING STARTS: 1980-2000

(million units, saar, monthly)

2.3

2.3

2.1

2.1

1.9

1.9

1.7

1.7

1.5

1.5

1.3

1.3

1.1

1.1

.9

.9



.7

.7

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00

Source: Census Bureau.

Page 5 / December 31, 2021 / Chapter 10 Charts: Predicting Bonds

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Predicting Bonds

Figure 11.

11

11

US TREASURY 10-YEAR BOND YIELD: 1987-2000

(percent, daily)

10

10

9

9

8

8

7

7

6

6

5

5



4

4

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Source: Federal Reserve Board.

13000 12000

Figure 12.

DOW JONES INDUSTRIALS AVERAGE: 1987-2000 (daily)

13000 12000

11000

11000

10000

10000

9000

9000

8000

8000

7000

7000

6000

6000

5000

5000

4000

4000

3000

3000

2000

1000

1987

1988

1989

Source: Dow Jones Inc.

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999 2000

2000 1000

Page 6 / December 31, 2021 / Chapter 10 Charts: Predicting Bonds

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