Bond yields have sunk lately, which could suggest trepidation about the U.S. economy.
Although the Federal Reserve remains firmly in hiking mode, raising its federal funds rate target already and indicating it will likely do so twice more this year, the 10-year U.S. Treasury yield is falling. Some strategists say the cause lies in shifting investor sentiment surrounding fading “Trump trades” and a renewed set of expectations around economic growth.
On Tuesday, the 10-year yield fell to 2.31 percent, its lowest level since the last week of February.
“It seems that the bond market just hasn’t really bought into the idea that inflation is coming back, or that economic growth is going to be surprisingly strong,” Yardeni Research president Ed Yardeni said Tuesday in an interview on CNBC’s “Trading Nation.” “The stock market seems to be more attuned to that kind of growth.”
When asked about what might be making bond investors wary, Yardeni pointed to recent weak economic data such as reports of distressed brick-and-mortar retail, along with weak March car sales.