30 years of summer, followed by 30 years of winter

This article discusses the cyclical pattern of rises and falls of interest rates, and makes the case for a future of real estate pricing characterized by ascending mortgage rates.

Data courtesy of the Federal ReserveThe central bank in control of regulating the U.S. financial and monetary system. Bank of St Louis

Bond market cycles

The average monthly 10-Year Treasury NoteA leading indicator of the direction of future Freddie Mac rates, influenced by worldwide demand for the dollar and anticipated future domestic inflationThe price changes over time in consumer goods and services, quantified in the consumer price index (CPI).. (T-Note) yield since 1900 is shown on the chart above. As demonstrated, interest rates on the 10-Year T-Note have shown a slow but steady overall decline since 1980, following a rise from lows last reached in 1941.

We can now see that 1940-1950 marked the beginning of what has become a 60 year rates cycle: approximately 30 years of rising rates, followed by 30 years of falling rates. This roughly mirrors the 60-year period prior to1950, in which interest rates peaked in 1921.