Recap of the 1^st Quarter of 2021

The most prominent occurrence in the last 3 months has been the rising treasury yield. Before we dive in, we must understand the difference between the short-term interest rates (Official interest rates) and long-term interest rates (Market interest rates).

1. Official Interest Rates

Official interest rates are the interest rates set by the Central Bank. They have been set and maintained at 0% up till today. The Central Bank increases and decreases the money supply accordingly to adjust the interest rates. The Central Bank is currently engaging in a monetary policy. They have been buying back USD$120 billion worth of bonds monthly. They then compensate the previous bond owners with money, hence increasing the money supply in the economy. Since there is more supply, money lenders will be more willing to lend money for less interest, hence decreasing the interest rates in the short term....