Loan Growth Vs. Interest Rates

When the Federal Reserve increases interest rates, loan growth will start to go down because people will find it more difficult to borrow at higher rates. Commercial paper rates will move up as banks won't lend out on the longer term.

GDP Growth Rate Vs. 10 Year U.S. Treasury Bond Yield

The 10 year treasury bond yield can be viewed as the fixed-income market’s assessment of current nominal GDP growth on a year to year basis.

So from the chart below: GDP growth (red) should correlate to the 10 year U.S. bond yield (blue).

By monitoring the 10 year U.S. bond yield, you should have a good view on U.S. nominal GDP growth.

Correlation: 10 Year Bond Yields Vs. Total Public Debt Growth

Azizonomics taught me another correlation. When debt grows faster (red line goes up), normally the treasury yield should go up.

But from year 2000 onwards it didn't happen. Either the treasury yields should go up, or the debt growth should slow down.

Chart 1: Federal Debt Growth Vs. 10 Year Bond Yields