What does a 2.35% 10-year Treasury note yield mean to you?

By | October 8, 2014

For those who may not follow the government bond market, 2.35% is the current yield of the 10-year Treasury note!

That said, the 52-week low yield for this benchmark security is a mere 4 basis points away at 2.31%.

So why, given the fact that the powers that be are trumpeting a stronger and improving economy, is the yield going down when it should be rising with a better economic outlook?

Market ‘experts’ will attribute yesterdays 9 basis point drop in yield to the fact that stocks were weak and therefore ‘risk assets’ were being shunned in favor of what is considered to be the ‘risk-free’ arena of US government debt.

What they like to call a ‘risk-off’ day.

But, as far as I can tell from the chart below the yield on the 10-year has been moving lower beyond just yesterday, in the face of the end to the Fed bond buying program…

This raises the following question, at least in my mind, concerning the actual reason for the 10-year government yield to be where it is.

The US 10-year Treasury note is currently trading at 2.35% because…

  1. The US economy actually much weaker than the talking heads and government officials would lead us to believe,
  2. The fear of inflation is so far off of the radar that there is no justification for rates to move higher,
  3. Numbers 1 and 2 are actually not in play and, if the flight to quality trade due to the geopolitical angst around the world were not a factor, yields would actually be moving higher,
  4. Numbers 1, 2 and 3 are occurring concurrently and yields will remain low for the foreseeable future.

Leave your answer and/or opinion in the comments below.

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Written by Michael Haltman, President of Hallmark Abstract Service, New York.

HAS is a provider of title insurance in New York State for residential and commercial real estate transactions specializing in the areas of New York City, Long Island and Westchester.

Remember that you have the right to choose your own title company (click here to learn more)!

If you have any questions you can reach Michael by email at mhaltman@hallmarkabstractllc.com.

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