Lower US Yields Suggest Concerns About Economy

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.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza