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I was simply amazed to see the yield on the 3-Month Treasury Bill drop to a minuscule 0.10% recently. Well now I’m equally amazed by the dramatic fall of long-term interest rates.

Currently paying a mere 3%, the 30-Year Treasury Note now yields only a small fraction of what it did 30 years ago when Paul Volcker “broke the back of inflation.” The downtrend on the chart is as clear as day.

But what do these microscopic yields tell us? Are we now facing the deadly threat of deflation (ala Japan over the past 20 years)? Or will the Feds’ super-reflationist policies spur inflation to again rear its ugly head in the near future?

All I can say with any confidence is that the chart above looks pretty darn oversold. I think it’s safe to expect at least a bounce-back in interest rates of all durations sometime soon.