The yield on 10-year Treasury bonds has moved to 1.55%, within 50 basis points of already low pre-pandemic rates. While anything near 1.60% is better than the roughly 0.60% observed last year, we expect the yield to rise to 1.9% at the end of the year as the economy reopens and the nearly $6 trillion in ... READ MORE >
interest rates
American peak growth? Here is some much-needed context
One of the stories driving conversation today in financial markets, especially among fixed-income participants, is the idea that U.S. growth has peaked and that is why bond yields have declined recently. This is a discussion in need of some context that considers the long-run sustainable pace of ... READ MORE >
The outlook for interest rates, in 11 charts
The yields on 10-year Treasury securities finally moved above 1% in January after 10 months of a public health crisis and economic distress. Though real (inflation-adjusted) interest rates remain negative – or nearly so – along the yield curve from overnight rates out to 10-year securities, there ... READ MORE >
CHART OF THE DAY: The 10-year Treasury yield goes its own way
The yield on 10-year Treasury bonds rose above 1.3% four times on Wednesday before closing just below 1.28%. The securities continued to trade in that range on Thursday. This comes despite the Federal Reserve’s efforts to suppress the cost of borrowing. Fixed-income investors are clearly pricing in a ... READ MORE >
Inflation-adjusted interest rates and investment in the future of Canada’s economy
A confluence of events and policy shifts has coalesced into a unique opportunity for the Canadian government and firms to make long-term strategic investments. The arrival of inflation-adjusted negative interest rates presents a rare chance for Canadian businesses to invest in their firms and ... READ MORE >
CHART OF THE DAY: The bond market’s assessment of governance and economic risk
The yield on 10-year Treasury bonds continues to move above 1%, reaching 1.15% last week for the first time since the end of last February, when the severity of the coronavirus outbreak was becoming apparent. The increase in long-term interest rates can be interpreted as an encouraging sign of ... READ MORE >
Bank of England: Deteriorating economic outlook and negative interest rates
The Bank of England at its meeting on Thursday is expected to keep its policy matrix unchanged as it downgrades its economic outlook and publishes its view on the use of negative interest rates. We expect the central bank to keep its policy rate at 0.1% and the total asset purchase program -- an ... READ MORE >
Inflation-adjusted interest rates, investment and the middle market
A confluence of events and policy shifts has coalesced into a unique opportunity for middle market firms to make long-term strategic investments in their firms. Interest rates, once adjusted for inflation, reside in negative terrain. This implies that firms should take advantage of those historically low ... READ MORE >
FOMC rate decision: Policy on hold as Fed extends asset purchases
The Federal Reserve on Wednesday extended its $120 billion monthly asset purchases through September 2021 to provide sustained accommodation to the economy as it recovers from a deep pandemic-induced recession. In addition, as the global economy absorbs the latest series of public health shocks, ... READ MORE >
CHART OF THE DAY: Pandemic economics, in 14 charts
The bond market, and not the equity market, provides perhaps the best assessment of the future of the economy. And these days, no matter how you parse the data, the bond market is telling a clear story: The corporate sector and the broader economy remain at risk. This stress is bleeding into state and ... READ MORE >