Come on up for the rising,
Come on up for the rising tonight

--Bruce Springsteen, “The Rising”

Another consequence of the Fed’s QE2 is going to be a rise in “long-term” Treasury bond yields. I say “long-term” in quotes because in the Fed’s actual statement, the verbiage used was “longer-term” Treasury bonds.

You see, the Fed’s definition of “longer-term” Treasuries is around five to seven years, and that’s where the central bank plans to concentrate its $600 billion in QE2 purchases. Now, the usual meaning of “long-term” bonds is farther out maturities like 20+-year Treasury bonds. So, what the Fed is doing, essentially, is leaving this segment of the market out to dry. This also means that “long-term” bond yields will have to rise to make them attractive again to investors.

It is my contention that with all of the borrowing that is taking place by countries around the world, interest rates are bound to continue climbing. According to estimates from the International Monetary Fund (IMF), the amount of money that advanced-nation governments will need to borrow in 2011 is a staggering $10.2 trillion. These debt levels have not been seen since the aftermath of World War II.

Next year, the U.S. government will have to borrow $4.2 trillion, according to the IMF. That’s 27.8% of its annual economic output, up from 26.5% this year. By comparison, Greece needs $69 billion, or 23.8% of its annual gross domestic product. The point here is that with so much borrowing needed, interest rates are bound to continue rising.

Fortunately, there are investments out there that take advantage of rising “long-term” interest rates. In fact, I just recommended one such fund in my Successful Investing advisory service.

If you’d like to get your money positioned to take advantage of “the rising,” click here.