{"id":30061,"date":"2012-06-06T02:07:38","date_gmt":"2012-06-06T06:07:38","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/06\/no-bull-could-the-us-10-year-treasury-note-yield-hit-1\/"},"modified":"2012-06-06T02:07:38","modified_gmt":"2012-06-06T06:07:38","slug":"no-bull-could-the-us-10-year-treasury-note-yield-hit-1","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/06\/06\/no-bull-could-the-us-10-year-treasury-note-yield-hit-1\/","title":{"rendered":"No Bull: Could the US 10-Year Treasury Note Yield Hit 1%?"},"content":{"rendered":"<p><strong>By <a href=\"http:\/\/www.MoneyMorning.com.au\" target=\"_blank\">MoneyMorning.com.au<\/a><\/strong><\/p>\n<p>In the wake of Friday&#8217;s disastrous jobs number, [US] <strong>10-year Treasury Note yields<\/strong> finally fell through the 1.5% level, trading as low 1.44% on the day.<\/p>\n<p>That plunge took many traders, talking heads and politicians by surprise. <\/p>\n<p><u>Now that we&#8217;ve busted 1.5%, the next stop is 1%.<\/u> <\/p>\n<p><span><\/span><\/p>\n<p>I can even see negative yields ahead, meaning that investors who buy US Treasuries will actually be paying the government to keep their money. <\/p>\n<h3><center>Why Bond Yields Will Continue to Fall<\/h3>\n<p><\/center><\/p>\n<p>First off, 10-year yields dropping to 1% means several things:<\/p>\n<ul>\n<li>Bond prices go even higher. Rates and prices go in opposite directions. Therefore when you hear that yields are falling, this means that bonds are in rally mode.\n<\/li>\n<li>The world is more concerned with the return of its money than the return on its money. You can take your pick why. Personally I think it comes down to two things above all else: the looming disintegration of the Eurozone and the fact that our country is $212 trillion in the hole and warming up for another infantile debt ceiling debate instead of reining in spending.\n<\/li>\n<li>More stimulus. Probably in the form of a perverse worldwide effort coordinated by central bankers as part of the greatest Ponzi scheme in recorded history.<\/li>\n<\/ul>\n<h3><center>Zero Percent or Negative Yields &#8211; in the US of A?<\/h3>\n<p><\/center><br \/>\nYes. Given the state of financial disarray in our world today, this is no longer just a probability. It&#8217;s moved into the &#8220;likely&#8221; category.<\/p>\n<p>Remember your history:<\/p>\n<ul>\n<li>During the Great Depression, U.S. bonds traded at negative yields when investors didn&#8217;t trust the banking system or corporate bond markets.\n<\/li>\n<li>During the 1990s, Japanese Federal bonds went negative as investors sought safety above all else. I remember mouths agape all over the trading floors when it happened and people realized that the unthinkable had just become reality. The headlines here give me a terrible sense of d&eacute;j&agrave; vu.\n<\/li>\n<li>In January of this year, Germany sold 3.9 billion euro worth of Federal German T-bills at -0.0122% yield, reinforcing the relative safety of German finances versus Greek and EU finances in general.\n<\/li>\n<li>Last week German, Danish and Swiss bills all traded at negative yields.<\/li>\n<\/ul>\n<h3><center>How Low Can Bond Yields Actually Go?&#8230;.<\/h3>\n<p><\/center><\/p>\n<p>I don&#8217;t know for sure but the bond markets on both sides of the Atlantic give us a pretty good idea at the moment.<\/p>\n<p>Take German 10-year bonds, for example. They closed Friday at a yield of 1.17%. <\/p>\n<p>When you subtract the 2% official inflation figure it suggests investors may be willing to accept negative real yields as low as -0.83%.<\/p>\n<p>In the <a href=\"http:\/\/www.dailyreckoning.com.au\/us-bonds-an-iou-from-the-worlds-biggest-debtor\/2012\/04\/27\/\">U.S., 10-year bonds<\/a> recently closed at a 1.45% yield. Subtract our latest official inflation rate of 2.30% and that suggests investors may push yields all the way to -0.85%.<\/p>\n<p>Shorter term investors may accept far less; perhaps yields in the negative 1%-3% range, which again implies that anybody who buys these things is willing to end up with less money at maturity than they started with when they bought the bond or t-bill.<\/p>\n<p>Bonds are traditionally thought of as safe haven investments but at this stage of the game, they&#8217;re more like jet fuel in search of a match. <\/p>\n<p>There&#8217;s a lot of talk about how rates can&#8217;t possibly go any lower.<\/p>\n<p>Don&#8217;t &#8220;buy it&#8221; &#8212; Japanese 10-year bonds are at 0.82% while German 10-year bonds are at 1.21%.<\/p>\n<p>Not only can rates go lower, but absent a comprehensive, practical solution to the world&#8217;s debt problems &#8211; like actually reining it in &#8211; we will get there.<\/p>\n<p> Just remember you heard it here first when 10-year note yields hit 1%.<\/p>\n<p><strong>Keith Fitz-Gerald<br \/>\nContributing Editor, Money Morning<\/strong> <\/p>\n<p><em>Publisher&#8217;s Note:<\/em> This is an edited version of an article that originally appeared in <em><a href=\"http:\/\/moneymorning.com\/2012\/06\/05\/no-bull-could-the-10-year-note-hit-1\/\" target=\"_blank\">Money Morning (USA)<\/a><\/em><\/p>\n<p><strong><em>From the Archives&#8230;<\/em><\/strong><\/p>\n<p><a href=\"http:\/\/www.moneymorning.com.au\/20120601\/how-bad-monetary-policy-will-end-the-welfare-state.html\" target=\"_blank\">How Bad Monetary Policy Will End the Welfare State<\/a><br \/>\n2012-06-01 &#8211; Dan Denning <\/p>\n<p><a href=\"http:\/\/www.moneymorning.com.au\/20120531\/the-setting-sun-of-the-japanese-economy.html\" target=\"_blank\">The Setting Sun of the Japanese Economy<\/a><br \/>\n2012-05-31 &#8211; Greg Canavan  <\/p>\n<p><a href=\"http:\/\/www.moneymorning.com.au\/20120530\/the-us-dollar-the-strongest-of-the-weak.html\" target=\"_blank\">The US Dollar &#8211; The &#8220;Strongest of the Weak&#8221;<\/a><br \/>\n2012-05-30 &#8211; Kris Sayce  <\/p>\n<p><a href=\"http:\/\/www.moneymorning.com.au\/20120529\/europes-energy-resource-puzzle.html\" target=\"_blank\">Europe&#8217;s Energy Resource Puzzle<\/a><br \/>\n2012-05-29 &#8211; Kris Sayce  <\/p>\n<p><a href=\"http:\/\/www.moneymorning.com.au\/20120528\/the-market-has-crashed-but-this-graphite-stock-has-more-than-doubled.html\" target=\"_blank\">The Market Has Crashed, But This Graphite Stock Has More Than Doubled<\/a><br \/>\n2012-05-28 &#8211; Dr. Alex Cowie <\/p>\n<div>\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/MoneyMorningAustralia?a=4pnSJaRuFPo:-lCtzv5RBCg:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/MoneyMorningAustralia?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/MoneyMorningAustralia?a=4pnSJaRuFPo:-lCtzv5RBCg:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/MoneyMorningAustralia?i=4pnSJaRuFPo:-lCtzv5RBCg:V_sGLiPBpWU\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/MoneyMorningAustralia?a=4pnSJaRuFPo:-lCtzv5RBCg:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/MoneyMorningAustralia?i=4pnSJaRuFPo:-lCtzv5RBCg:gIN9vFwOqvQ\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/MoneyMorningAustralia\/~4\/4pnSJaRuFPo\" height=\"1\" width=\"1\" \/><br \/>\n<a href=\"http:\/\/feedproxy.google.com\/~r\/MoneyMorningAustralia\/~3\/4pnSJaRuFPo\/no-bull-could-the-us-10-year-treasury-note-yield-hit-1.html\" target=\"_blank\">No Bull: Could the US 10-Year Treasury Note Yield Hit 1%? <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By MoneyMorning.com.au In the wake of Friday&#8217;s disastrous jobs number, [US] 10-year Treasury Note yields finally fell through the 1.5% level, trading as low 1.44% on the day. That plunge took many traders, talking heads and politicians by surprise. Now that we&#8217;ve busted 1.5%, the next stop is 1%. I can even see negative yields &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/forex-news\/2012\/06\/06\/no-bull-could-the-us-10-year-treasury-note-yield-hit-1\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;No Bull: Could the US 10-Year Treasury Note Yield Hit 1%?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-30061","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/30061","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=30061"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/30061\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=30061"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=30061"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=30061"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}