{"id":18816,"date":"2019-06-30T13:24:01","date_gmt":"2019-06-30T17:24:01","guid":{"rendered":"https:\/\/www.pgmcapital.com\/?p=18816"},"modified":"2019-06-30T13:24:04","modified_gmt":"2019-06-30T17:24:04","slug":"us-10-year-treasury-yield-below-2-percent","status":"publish","type":"post","link":"https:\/\/www.pgmcapital.com\/nl\/us-10-year-treasury-yield-below-2-percent\/","title":{"rendered":"US 10-Year Treasury yield below 2 percent."},"content":{"rendered":"\n

Dear PGM Capital\u2019s Blog reader,<\/p>\n\n\n\n

The yield of the US 10-year Treasury has declined below 2% on several recent trading days, in the week of June 24, to close on Friday, June 28, at 2 percent as can be seen from below 5-day chart.<\/p>\n\n\n\n

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INTRODUCTION:<\/h3>\n\n\n\n

A United States Treasury security<\/strong> is a government debt instrument issued by the United States Department of the Treasury to finance government spending as an alternative to taxation. Treasury securities are often referred to simply as Treasurys.<\/strong><\/p>\n\n\n\n

Although the United States is a sovereign power and may default on its debt, its strong record of repayment has given Treasury securities a reputation as one of the world’s lowest-risk investments.<\/p>\n\n\n\n

The 10-year Treasury note has become the security most frequently quoted when discussing the performance of the U.S. government bond market and is used to convey the market’s take on longer-term macroeconomic expectations. Below chart shows the yield of the 10-year treasury note in the periode of April 1953 – May 2019.<\/p>\n\n\n\n

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YIELD 10-YEAR NOTE BELOW 2%:<\/h3>\n\n\n\n

The dip below 2% on the 10-year happened again on Tuesday, June 25, in the morning after a disappointing consumer confidence reading, as investors looked for safety with the much weaker-than-expected data hitting its lowest level since June 2017, as can be seen from below chart.<\/p>\n\n\n\n

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That has happened five times in the past decade and has been key to S&P 500 performance.<\/p>\n\n\n\n

According to history, a move under the key psychological level of 2% on the 10-year treasury note is a big deal, and bodes well for stocks.<\/p>\n\n\n\n

INVERTED YIELD CURVE:<\/h3>\n\n\n\n

An inverted yield curve is an interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession.<\/p>\n\n\n\n