U.S. 10-Year Bond Yields Less Than Inflation

It’s official.  You can lock up your money for a decade and, if inflation remains the same at just under 2%, you’ll lose purchasing power in the process.

Stock prices and bond yields fell on Monday as investors worried about tensions in Hong Kong, the trade wars, and a possible global recession.

The biggest changes were in the bond market where the 10-year Treasury bond yield dipped to 1.64%, less than inflation at 1.9%, and the 30-year Treasury bond yield fell to the lowest level since July 2016.

The difference between the yield on 2-year and 10-year bonds was just 5.3 basis points.

Jim Vogel, interest rates strategist at FTN Financial in Memphis, Tennessee, said:

“We’re back to worrying that things are still unsettled and so there’s no need to push stocks higher, and without that optimism, without that ‘things-are-getting-better’ impulse behind stocks, Treasury yields are moving to the lower middle of the range.”

Since the beginning of the year, 10-year yields have fallen more than a hundred basis points, on track for its steepest drop in eight years.

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