Rising rates: Why is the 30 year yield so low?
The 30 year treasury yield has traded under 3.25% for almost 4 years now.
The Fed continues to hike rates on a quarterly basis and Trump is unhappy about rising rates.
Every day we hear how the economy is 'in great shape', and jobs data is 'as good as it gets'.
More significantly what is pushing up rates are increased treasury issuance and the Fed's accelerating Quantitative Tightening.
So all in all why isn't the 30 year yield closer to 4% like it was only four years ago?
For several years the market has priced in low expectations for the long term.
The yield curve continues to flatten towards the lowest spreads since leading up to the great recession.
(28 basis points on the 30-5 spread and 30 points on the 10-2 spread).
At this rate the curve could flatten or invert in 6 to 12 months.
An inverted yield curve historically is followed by economic recession.
What's your thoughts?
The Fed continues to hike rates on a quarterly basis and Trump is unhappy about rising rates.
Every day we hear how the economy is 'in great shape', and jobs data is 'as good as it gets'.
More significantly what is pushing up rates are increased treasury issuance and the Fed's accelerating Quantitative Tightening.
So all in all why isn't the 30 year yield closer to 4% like it was only four years ago?
For several years the market has priced in low expectations for the long term.
The yield curve continues to flatten towards the lowest spreads since leading up to the great recession.
(28 basis points on the 30-5 spread and 30 points on the 10-2 spread).
At this rate the curve could flatten or invert in 6 to 12 months.
An inverted yield curve historically is followed by economic recession.
What's your thoughts?
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