Get Breaking Alerts on Stocks Before The Mainstream Media

Stay informed of the biggest news on stocks so you can react before 90% of retail investors.
Email address
We guarantee you to keep your privacy
Connect with us
Financial Press
market-extra:-10-year-treasury-yield-plunged-to-its-lowest-in-234-years,-says-deutsche-bank
market-extra:-10-year-treasury-yield-plunged-to-its-lowest-in-234-years,-says-deutsche-bank

Breaking

Market Extra: 10-year Treasury yield plunged to its lowest in 234 years, says Deutsche Bank

Market Extra


10-year U.S. Treasury note yield touched an overnight low of 0.52% on Friday

Photo by RADEK MICA/AFP via Getty Images

The slide in the U.S. bond market’s benchmark yield is one for the history books.

The 10-year Treasury note yield
TMUBMUSD10Y,
0.549%

fell as low as 0.520% in overnight trading on early Friday, matching levels last seen in March 9 when the benchmark maturity rate to an all-time low after worries about the COVID-19 pandemic sent investors scurrying into safe haven assets.

According to Deutsche Bank, this record low stretches farther back than most might expect. They calculated the current nadir in the 10-year yield went back 234 years, based on data spliced together from the various times the U.S. government has borrowed money in the past.

“The U.S. has been through depressions, deflations, wars, restrictive gold standard regimes, market crashes and many other major events and never before have we seen yields so low back to when the Founding Fathers formed the country,” said Jim Reid, Deutsche Bank’s chief credit strategist, in a Friday note.

Get Breaking Stock Alerts

Stay informed of the biggest news on stocks so you can react before 90% of retail investors.
Email address
We are Spam free & Secure 🙂

The relentless slide in the 10-year note reflects how the bond market’s bull run has defied prognostications by pundits that interest rates and yields would eventually rise, as the economy grew before the pandemic or on potential inflation caused by the Federal Reserve’s money printing this year.

But years of steady economic growth and low inflation have pushed the Federal Reserve’s benchmark fed funds interest rate progressively lower, leaving less room for the central bank to ease monetary policy further.

As the Fed’s policy interest rate fell after economic downturns in 2008 and in 2020, the central bank has been forced to adopt other unconventional monetary policy tools such as outright bond purchases to support economic growth.

Ultra-low bond yields point to trepidation over the U.S. economy’s health as the tally of coronavirus infections marches higher in many American states.

By contrast Wall Street stocks have shrugged off the economic devastation and pinned their hopes on a free-spending government and an accommodative central bank.

Read: Dr. Osterholm: Americans will be living with the coronavirus for decades

Reid noted the S&P 500 index
SPX,
+0.76%

was trading up more than 18% since March 9, while the yield compensation offered for sub-investment grade corporate bonds
HYG,
+0.18%

had also narrowed 150 basis points over the same stretch, reflecting the sharp recovery in prices of so-called risky assets.

Written By

Click to comment

Leave a Reply

Your email address will not be published.

Related Articles

Breaking

U.S. stocks kicked off the fourth quarter with strong back-to-back gains on Tuesday, with the S&P 500 jumping more than 5.7% off its 2022...

Breaking

S. Daniel Leon, co-founder and chief strategy officer of Celsius, has left the firm just a week after chief executive Alex Mashinsky declared his...

Breaking

Duolingo Inc. DUOL, +4.88% said Tuesday it acquired Gunner, a design and animation studio based in Detroit. Get Breaking Stock AlertsStay informed of the...

Breaking

Tesla Inc. Chief Executive Elon Musk now plans to close his proposed $44 billion deal for Twitter Inc., according to a Tuesday filing that...

Get Breaking Stock Alerts

Stay informed of the biggest news on stocks so you can react before 90% of retail investors.
Email address
We are Spam free & Secure :)

Get Breaking Stock Alerts

Email address

Get Breaking Stock Alerts

Stay informed of the biggest news on stocks so you can react before 90% of retail investors.
Email address