10-Year US Bond Yields at All-Time Low

[BakshisMouse]

http://finance.yahoo.com/q?s=^TNX

Closed at 1.765% today. That yields are this low makes me think that the bond market will not give up on America in two years like Paul Ryan says it will.

 

[Toro]

Amazing

 

[BakshisMouse]

Amazing

How is it amazing?

Oh, and I made a mistake that I chalk up to temporary dyslexia. The actual all time low close was 1.7%. I must have put the 6 in front of the 7 in my mind.

It might actually break the all time low soon. Right now they're yielding 1.7260%.

 

[iamwhatiseem]

The China-effect.

 

[BakshisMouse]

The China-effect.

Elaborate, please.

 

[iamwhatiseem]

The China-effect.

Elaborate, please.

They have slowed their bond purchases to a crawl as I understand it.

 

[BakshisMouse]

The China-effect.

Elaborate, please.

They have slowed their bond purchases to a crawl as I understand it.

I can't find any investing or financial writing that suggests that bond yields fall when fewer people buy them. Would you please explain how fewer bond purchasers causes yields to fall?

 

[konradv]

The China-effect.

Elaborate, please.

They have slowed their bond purchases to a crawl as I understand it.

Then bond rates should be rising to attract more investors.

 

[BakshisMouse]

Page: Chapter 6: Bonds, Bond Prices and the Determination of Interest Rates, Part II

From Oswego, State University of New York

I found the explanation I was searching for. As this chart shows, when the demand for bonds falls, bond yields rise. This is a standard demand-side graph. Fall in demand is shown on the graph by a shift of the diagonal blue demand line to the left. If that happens, the bond yield, or the interest rate, rises.

 

[BakshisMouse]

I'm reviving this thread just to point out that 10-year US Treasury Notes are yielding 1.63% now, which is actually an all-time low.

http://finance.yahoo.com/q?s=^TNX

 

[Norman]

I would expect it to be more of an Europe effect than China effect.

However, I do say US bonds are way overvalued (as safe heaven). So the long term effects of this can be quite negative. Especially as the politicians will justify burrowing loads of short term debt with these wields.

I think FED and other organizations are heavily involved as well. Negative interest rates mean no safe heaven at all. Doesn't make much sense to make such trade.

 

[BakshisMouse]

I would expect it to be more of an Europe effect than China effect.

However, I do say US bonds are way overvalued (as safe heaven). So the long term effects of this can be quite negative. Especially as the politicians will justify burrowing loads of short term debt with these wields.

I think FED and other organizations are heavily involved as well. Negative interest rates mean no safe heaven at all. Doesn't make much sense to make such trade.

With the Republican House, that doesn't seem like it will be the case for a long time.

 

[iamwhatiseem]

Crazy...

 

[BakshisMouse]

Crazy...

What is so crazy about it?

 

[Leweman]

Hell yeah! that's good right? Like if gas or unemployment were at all time lows?

 

[TakeAStepBack]

the federal reserve purchased 61% of all treasury issuance in 2011. The yields are low to keep the shell game shuffling.

 

[BakshisMouse]

Hell yeah! that's good right? Like if gas or unemployment were at all time lows?

Well, the price of oil is falling steadily. Plus, with bond yields this low, the federal government could initiate fiscal stimulus that could lower unemployment.

Not that the federal government is likely to initiate a huge stimulus bill, but these low yields coupled with high unemployment could justify it.

 

[iamwhatiseem]

Crazy...

What is so crazy about it?

What is causing it.
Everyone is running from European assets into the U.S. bond market...which further hurts European markets of course.
We are seeing the beginnings of a solid crash right before our eyes. The ESTX is down 18% since March...if the DOW was down 18% we would be at 10,800 right now.
And there is no way this is over, we are just at the beginning of Spain...Italy next.

 

[BakshisMouse]

the federal reserve purchased 61% of all treasury issuance in 2011. The yields are low to keep the shell game shuffling.

True, but even when the Quantitative Easing program ended, 10-year bond rates were still extremely low. The yields are reaching rock bottom, and there's no serious talk from the Federal Reserve for a fourth round of Quantitative Easing. That must count for something.

 

[BakshisMouse]

Crazy...

What is so crazy about it?

What is causing it.
Everyone is running from European assets into the U.S. bond market...which further hurts European markets of course.
We are seeing the beginnings of a solid crash right before our eyes. The ESTX is down 18% since March...if the DOW was down 18% we would be at 10,800 right now.
And there is no way this is over, we are just at the beginning of Spain...Italy next.

Yes, the market has a ways to go before it hits the bottom. I am guessing that it won't hit 2008-2009 financial crisis bottoms, but it will be close.