Market cycles represent fluctuations in stock, bond and investment markets. These cycles are closely tied with large-scale economic business cycles and have an important impact on investment, financial, cash flow and personal planning.
Following the 1989 collapse of the Soviet Union, many people cited the United States’ free market as its key advantage over the state-controlled economy of the USSR. Capitalism seemed to have won the day and many Americans reaped the benefits of an unfettered market.
Reasonable interest rates are the cornerstone of banking and the economy. Without interest, there would be no incentive to loan money or save in banks. Over the centuries, borrowing has become more sophisticated and complex. A single percentage point can influence billions of dollars in commerce.
In finance, a “yield” is the overall rate of return on a particular investment. A yield curve is a line that depicts the rise or fall in a bond’s yields for increasing contract lengths (maturities).
The yield curve most commonly referenced is the U.S. Treasury yield curve. Because U.S. Treasury bonds have traditionally been viewed as a risk-free investment, their yield curve represents (to many) the absolute minimal rate for holding debt over a given period.
We all have budgets to keep; whether or not we can comfortably keep them is a matter of planning for our income and expenses.
The U.S. government, as large and far-reaching as it is, has a budget of its own. Unfortunately, it is not always possible for the government to fulfill all its legal obligations with the money it receives. Each year the government must find ways to fill any budget deficits. The government does this by borrowing through public or internal debt.