10-year Treasury yield drops below 1.3% for the first time in history

The bond market set a significant milestone on Thursday, with bond yields — as measured by the yield on the benchmark 10-year Treasury note — dropping below 1.3% for the first time in history.

By the numbers: The yield was above 3% as recently as November 2018.

Why it matters: The ultra-low yield on U.S. bonds indicates that the market is very somber about the future. It means that...

• Long-term inflation expectations are well below the Fed's 2% target rate.
• Long-term growth expectations are also pretty mediocre.
• Bearish demand for ultra-safe assets is projected to remain very strong for a decade at least.

Low interest rates also prove that trillion-dollar annual deficits don't cause rates to rise. Quite the opposite, it would seem. At least the government is spending those trillions, rather than trying to save them for some rainy day.

Go deeper: Treasury yields are sinking toward record lows