Real Yield Collapse
Jeroen Blokland | Mar 28, 2019 08:48
Bond yields have fallen sharply in recent days. Most of the drop can be attributed to a collapse in real yield, as today’s chart shows. Since the beginning of this month, the US real 10-Year Treasury yield has come down from 0.66% to just 0.25% today.
At the same time, inflation expectations and, thus, the inflation part of nominal bond yields have remained fairly constant. This implies the drop in bond yields has been driven largely by expectations about lower future growth and less by future inflation levels.
Not that long ago the opposite was true, with low employment and accelerating wage growth, and higher oil prices hinting at potential inflationary risks. Whoever said that bond markets are boring?
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.