The demand for U.S. Treasury securities remains strong. As a result, yields continue to move lower despite decent economic growth, stable inflation and increased supply. Treasury securities will likely remain in high demand for the foreseeable future as they continue to be the global safe-haven asset of choice. With the 30-year bond now trading with a yield below 2% and 10-year yields closing in on 1.5%, yields have fallen by almost 150 basis points over the last year and a half.
The recent rally has come at a time when demand has been strong due to the uncertainty around the impact of coronavirus and the belief that economies will be aggressive to utilize monetary and fiscal stimulus to offset any impact. Last weekend’s announcement from Apple that it will demonstrate a material impact from the virus in this quarter’s results only adds to the uncertainty. The demand for U.S. assets, both stocks and bonds, continues to drive outperformance versus other global markets.
I expect Treasury yields to remain in strong demand, and I don’t see a significant rise in yields in the next several months. I will be watching closely to see how global negative rate policies evolve and what impact that will have on the U.S. in the medium term.
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