Friday, December 16, 2011

Bond bubble? Chart of the Day shows 112-year lows for 10-year T-bond yield

We've looked at the apparent bubble in U.S. Treasury bonds and 10-year notes, including the projection to $150 based on Fibonacci and the point-and-figure projections. Today, the folks at Chart of the Day have circulated a very long-term view, including a very interesting downtrend channel for the 10-year yields. Let's take a look:
Chart of the Day - 112-year lows for 10 year T-bond yield
For some perspective on all-important long-term interest rates, today's chart illustrates the 112-year trend of the 10-year Treasury bond yield (thick blue line). As concerns over government debt as well as a struggling global economy have increased and fears over inflation diminished, investors have moved towards safety resulting in a significant decline of the 10-year Treasury bond yield. The 10-year yield has declined a fairly dramatic 300+ basis points (i.e. 3%) since the peak of the credit bubble. This decline has brought the 10-year Treasury bond yield to a 112-year monthly low. It is worth noting, however, that the quarter-century downtrend of the 10-year bond yield remains intact and will remain intact even if the 10-year yield were to drop significantly below 1.5% over the near-term.

Where's the Dow headed? The answer may surprise you. Find out right now with the exclusive & Barron's recommended charts of Chart of the Day Plus.

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Quote of the Day
"We are not makers of history. We are made by history." - Martin Luther King, Jr.

Events of the Day
December 20, 2011 - Hanukkah (1st day)
December 22, 2011 - First day of Winter (Northern Hemisphere)
December 25, 2011 - Christmas Day
December 26, 2011 - Kwanzaa (1st day)

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