NEW YORK (TheStreet) -- Over the last several years, investors in developed markets have come to know the number zero intimately.
Cash yields have been at zero across North America and Europe for most of the last five years, and in Japan since the 1990s. The search for an alternative with a more rewarding yield drove most high quality bonds down toward zero and eventually, carried over to higher yield debt, emerging market debt and even drove down equity yields.
This is changing now, but in ways unimaginable before zero became so familiar.
The Federal Reserve is finally getting close to moving rates higher later this year. Yes, disinflation has temporarily intensified with the collapse in energy prices and slow global growth has removed the urgency. But recent weakness in capital expenditures in the U.S. oil extraction industry masks a tremendous boost to real consumer purchasing power that should lead to higher discretionary spending and a virtuous effect on job growth and wages. The recent decline in long term interest rates - a "reverse taper tantrum" - has lowered borrowing costs and is stimulative to the economy overall. As a result, confidence is soaring and borrowing is picking up. With this backdrop, the Fed has every reason to finally move rates upward from zero and may even do so in the first half of 2015.
In other developed markets the opposite is happening. The European Central Bank recently cut official rates to negative 0.25%, and its quantitative easing program announced last week has driven some government bonds yields below zero.