Search
  • seth257

Are Yields Near a Bottom?

Economic Blog


The 10-year U.S. Treasury yield moved to within .05% of its recent low on Friday, January 31, approaching the 1.47% mark set back in August 2019. Prospects of stabilizing global growth and progress on trade encouraged yields to start pressing higher over the last four months of 2019; however, fears of the potential economic damage from efforts to contain the spread of the coronavirus steered investors back to the relative safety of Treasuries.


While recent declines may make it appear yields are destined to push lower, large swings in Treasury yields, both higher and lower, have been normal. As shown in LPL Chart of the Day, since the early days of the 2007–2008 financial crisis, the 10-year Treasury yield has made 15 moves of at least 0.75%, averaging a reversal about every 300 days or so, or a little less than once a year.


If we don’t break through the recent low of 1.47%, then the last move lower would be about average: a decline of 1.77% over 293 days, which is close to the average decline of 1.63% over 297 days. While we have had larger moves down, historically, a meaningful move higher would be entirely normal.


“The 10-year Treasury yield looks low to us relative to U.S. economic fundamentals and firming global growth,” said LPL Research Chief Investment Strategist John Lynch. “While we remain mindful of the risk of increased market volatility, which would probably drive yields lower, we maintain our 2020 forecast range of 2–2.25%.”



IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.


Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

This Research material was prepared by LPL Financial, LLC.


Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).


Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity

If your advisor is located at a bank or credit union, please note that the bank/credit union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL may also be employees of the bank/credit union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union. Securities and insurance offered through LPL or its affiliates are:


Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations | May Lose Value


For Public Use – Tracking # 1-946996

0 views

Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA & SIPC. The LPL Financial registered representative(s) associated with this page may only discuss and/or transact business with residents of the following states: Arizona (AZ), California (CA), Colorado (CO), Florida (FL), Georgia (GA),Illinois (IL), Kentucky (KY), Maryland (MD), Massachusetts (MA), Michigan (MI),Mississippi (MS), North Carolina (NC), Nevada (NV), New York (NY), Ohio (OH), Texas (TX), Wisconsin (WI). The SmartVestor program is a directory of investment professionals. Neither Dave Ramsey nor SmartVestor are affiliates of Salomon & Co. or LPL Financial.

 

© 2018 Salomon & Company, All rights reserved.