Feb 27, 2020 - Economy & Business

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

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Data: FactSet; Chart: Axios Visuals

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

Go deeper

Record low U.S. Treasury yields are expected to keep falling

Data: FactSet; Chart: Andrew Witherspoon/Axios

The yield on the U.S. 10-year Treasury note fell below 1% for the first time ever after the Fed's unexpected rate cut.

The state of play: This drop might not be the end. "We expect Treasury yields to remain low and perhaps fall even lower," Charles Schwab chief fixed income strategist Kathy Jones wrote.

Yield on U.S. 10-year bond breaks 1% for first time ever

Photo: Spencer Platt/Getty Images

The yield on the U.S. 10-year Treasury fell below 1% for the first time ever after the Fed unexpectedly cut rates to shield the economy from any coronavirus impact.

Why it matters: Yields on the benchmark 10-year note have fallen by more than 90 basis points in just the first two months or so of 2020. That's a huge move in a short amount of time — and reflects investors' appetite for safe-haven assets and pessimism about the global economy.

Go deeperArrowUpdated Mar 3, 2020 - Economy & Business

The coronavirus outbreak could finally sink the dollar

Data: FactSet; Chart: Axios Visuals

The dollar is buckling under the weight of expected rate cuts from the Fed and record-low U.S. Treasury yields.

The state of play: It has fallen to its weakest level when valued against a group of global currencies since the beginning of the year, and experts think there could be much further to go.