An aggressive rally in the Treasury market this morning has resulted in the lowest 10-year Treasury yield since June of last year. Nearly everyone is looking for an explanation as to why longer-term interest rates continue to fall in the face of reduced Fed support and better economic data. So what is going on?
To boil things down, there are really only two roads we can follow in an environment of such as this. The economy will either muddle along at a sub-par rate of about 2 percent until balance is restored, or we go down the path of running up debt in an effort to produce higher growth rates in the near term.
One important step to be taken in order to bring down the high unemployment rate is to close the skills gap on youth labor markets. The skills mismatch has become a persistent and growing trend in Europe. Over-education and over‐skilling coexist with under-education and under‐skilling and increasingly with skills obsolescence brought about by long‐term unemployment. Evidence shows that there is a higher risk of mismatch for those at the bottom of the educational pyramid, which is reflected in relatively high unemployment rates for low‐skilled youth in comparison with high‐skilled youth.