At a Glance
- Safety and a search for yield among factors driving treasury markets
As stock markets became volatile in late February and early March, investors made a move toward U.S. treasuries. The result has been record low yields for the U.S. 10-year treasury note, which reached below the one percent mark for the first time.
Jack Bouroudjian examines the factors driving declining yields, focusing on four areas:
– The safety trade
– Federal Reserve action
– Disinflationary pressure
– The search for yield
Central bank action across the globe, matched a lack of inflation has led to a long-term decline in the U.S. 10-year yield, Jack points out. Perhaps the greatest factor driving the recent action in treasuries, he says, is the search for a return.
“Whether it be a virus, a slowdown of growth or another ‘black swan’ event, US treasuries are a perceived safe haven. When capital needs a home, capital goes to where it is treated the best. For global capital, that home is often the U.S. treasury markets.”
Watch this week’s video above.