ISMS 15: Top 5 DM Country Interest Rates – Steep US Inversion
Listen on
Apple | Google | Spotify | YouTube | Other
Click here to get the PDF with all charts and graphs
Developed Countries – Vast DM Country increases in ST and LT rates, Japan stays an outlier, US looks worst based on yield curve inversion
Interest rate overview
- US 3m yield 4.9%, Japan -0.3%, Germany 2.6%, UK 4.1%, France 2.8%
- US 1yr yield 4.7%, Japan -0.1%, Germany 2.9%, UK 4.0%, France 3.0%
- US 10yr yield 3.6%, Japan 0.3%, Germany 2.3%, UK 3.5%, France 2.8%
Year-on-year changes
- 3m yield in US up the most YoY as it started the interest rate hike
- USA 3m yield was up 4.4ppts, Japan down 0.2ppts, Germany up 3.2ppts, UK up 3.5ppts, France up 3.4ppts
- 1yr yield has risen significantly in developed countries; only Japan’s yield didn’t move
- USA 1yr yield was up 3.1ppts, Japan down 0.1ppts, Germany up 3.3ppts, UK up 2.7ppts, France up 3.5ppts
- 10yr yield grew in all developed countries YOY, even in Japan
- USA 10yr yield was up 1.2ppts, Japan up 0.1ppts, Germany up 1.8ppts, UK up 1.9ppts, France up 1.8ppts
Rate progression
- 3m yield has risen steepest in the US
- Germany, UK, and France 3m yield follows US, but with a delay
- Japan remains an outsider and continues with its negative interest rate policy
- 1yr yield in developed countries moved up aggressively
- However, in March 2023, US 1yr yield dropped for the first time in 12 months
- Other developed countries also saw a slight fall recently
- 10yr yield has risen in all developed countries, but starts to show flattening behavior recently
- Since October 2022, the 10yr yield among the developed countries hasn’t moved much and stayed flat
Yield curve
- 3m yield curve inversion in the US widened after the Fed aggressively increased short-term rates
- In March 2023, the 3m rate was 1.3 ppts higher than the long-term rate
- 1yr yield curve in Japan steepened over the past 12 months
- Japan is among the few countries that haven’t seen a yield curve inversion
- Quite the opposite is true as the differential between 10yr yield and 3m rates doubled over the past 12 months
- 10yr yield curve in Germany turned into negative territory, but far less severe compared to World
- 10yr yield curve in the UK also saw a slight widening of its yield curve inversion
- 10yr yield curve in France flattened massively and seems likely to invert soon
Key points
- Aggressive ST rate hikes led by the US and followed by European developed countries
- LT rates seem to have peaked and fell MoM
- Japan with different policy sees almost no movements in both ST and LT rates
- US faced steepest inversion among developed countries; Japan maintains positive yield curve
Click here to get the PDF with all charts and graphs
Andrew’s books
- How to Start Building Your Wealth Investing in the Stock Market
- My Worst Investment Ever
- 9 Valuation Mistakes and How to Avoid Them
- Transform Your Business with Dr.Deming’s 14 Points
Andrew’s online programs
- Valuation Master Class
- The Become a Better Investor Community
- How to Start Building Your Wealth Investing in the Stock Market
- Finance Made Ridiculously Simple
- FVMR Investing: Quantamental Investing Across the World
- Become a Great Presenter and Increase Your Influence
- Transform Your Business with Dr. Deming’s 14 Points
- Achieve Your Goals
Connect with Andrew Stotz:
About the show & host, Andrew Stotz
Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.
Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.