10-Year Treasury yields at new 50-year low

10-Year Treasury yields are testing support at 2.00 percent — a 50-year low. One thing is clear: Fed monetary policy has failed. Suppressing short-term interest rates has, in most cases, lifted the economy out of recession, but also set us up for an even bigger crash the next time round — requiring even more severe interest rate cuts. Long-term yields have been falling for 30 years. We are now clipping the tree tops — with short-term rates near zero and no gas in the tank to lift us over the next obstacle. A bond market revolt cannot be far off.

10-Year Treasury Note Yields $TNX

A “bond market revolt” is a general sell-off of Treasurys when bond-holders decide that rewards (yield) are not commesurate with the risk. We have already witnessed several bond-holder revolts in European markets. A rise in yields would raise the cost of rolling-over existing Treasury debt, ratcheting up the budget deficit even further. This is a threat that should not be ignored.

11 thoughts on “10-Year Treasury yields at new 50-year low

  1. Thomas Franklin says:

    Hi Colin,

    I have been recieving your market updates for sometime now and find they are a great scource of reliable information. Thank you!

    My question is not just about the bond market although it is part of it but a reflection of the bigger picture globally with what is unfolding. With many governments facing rising debt levels and the Feds policy of financial stimulus, surely this is just delaying the inevitable of “Global Financial Meltdown” The USA and the dollar is a sinking ship, with the Fed losing the battle of bailing the ship out. So what do you think will replace the system we currently have?

    Kind regards

    Thomas

  2. Jason says:

    The big bang is not that far away then!

  3. Kevin Riggs says:

    Thanks Colin!
    I’ve enjoyed reading your market commentary for the past two years.
    KR

  4. Paul Hollings says:

    Same as above: Colin can you explain what you mean by a “Bond Market Revolt” please

  5. esu kumara says:

    great analysis so clear and direct. we have a cta firm in the pacific northwest…focusing upon fx and futures/commodities. i appreciate your hard work and effort colin…

    Esu Kumara

  6. Rich W says:

    if there is a ” bond market revolt ” what happens ? as someone new to investing I have don’t know.

  7. Colin Twiggs says:

    A “bond market revolt” is a general sell-off of Treasurys when bond-holders perceive that the rewards (yield) are not commesurate with the risk. We have already witnessed several bond-holder revolts in European markets. A rise in yields would raise the cost of rolling-over existing Treasury debt, ratcheting up the budget deficit even further. This is a threat that should not be ignored.

  8. Ranald Macdonald says:

    ‘A bond market revolt cannot be far off.’

    What does this mean?

  9. Keith says:

    define what you mean exactly by a “bond market revolt” please?

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