OpenMarkets Weekly: Why Are 10-Year Yields So Low?

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.

OpenMarkets is an online magazine and blog focused on global markets and economic trends. It combines feature articles, news briefs and videos with contributions from leaders in business, finance, economics and politics in an interactive forum designed to foster conversation around the issues and ideas shaping our industry.

Additional Recent Articles in Market Updates