June 14, 2016

The Markets

The British may be leaving. The British may be leaving.

Last week, the interest rate on 10-year U.S. Treasuries dropped to levels last seen in 2013. Why, you may ask, would bond yields move lower when Federal Reserve policy is to push interest rates higher? The answer can be found across the pond.

On June 23, the United Kingdom, a.k.a. Britain, will vote on whether the country should remain in the European Union (EU) or leave. The New York Times reported:

“The economic effect of an exit would depend on what settlement is negotiated, especially on whether Britain would retain access to the single market for duty-free trade and financial services…Most economists favor remaining in the bloc and say that an exit would cut growth, weaken the pound, and hurt the City of London, Britain’s financial center. Even economists who favor an exit say that growth would be affected in the short and medium term, though they also say that Britain would be better off by 2030.”

When polling indicated voters were leaning toward leaving the EU, and bookmakers indicated a neck-and-neck race, investors got worried and sought the safety of U.S. Treasuries.

Rates on government bonds in Europe, and elsewhere, moved lower, as well. In some cases, those rates dropped into negative territory. Barron’s reported more than $10 trillion of government bonds had negative yields last week. Investing in 10-year Swiss government bonds cost investors about 50 basis points, while investing in Japanese 10-year government bonds cost 17 basis points.

That makes earning about 1.6 percent on a 10-year U.S. Treasury look pretty good.

Caregiving

Let’s turn our attention to caregivers.

The AARP Public Policy Institute found about 40 million family caregivers spent 37 billion hours providing care to adult family members during 2013. The value of that care was estimated to be about $470 billion. That’s “as big as the world’s largest company and bigger than Medicaid and out-of-pocket spending on health care.”

We’ve mentioned before some experts don’t believe GDP is an accurate measure of economic well being because it doesn’t really reflect the value of all goods and services in a country. Clearly, it doesn’t account for parenting and caregiving although both are important to society’s well being.

How much do you suppose volunteering is worth?

Weekly Focus

“You are not here merely to make a living. You are here in order to enable the world to live more amply, with greater vision, with a finer spirit of hope and achievement. You are here to enrich the world, and you impoverish yourself if you forget the errand.”
-Woodrow Wilson, 28^th United States President

Image is public domain.