Implied yield on U.S. 10-Year treasury futures trading below 1% for first time

[RandySF]

NEW YORK (Reuters) - The implied yield on U.S. 10-Year Treasury futures <TYv1> traded below 1% for the first time, as investors grew increasingly unnerved by the spread of coronavirus.

Treasury futures jumped at the open of trading on Sunday night as investors took little solace from weekend comments by U.S. officials that aimed to soothe panic about a pandemic.

Stock futures opened lower. Stock markets plunged last week, with an index of global stocks setting its largest weekly fall since the 2008 financial crisis, and more than $5 trillion wiped off the value of stocks worldwide.

Money continued to pour into U.S. Treasuries as worries have increased about the global spread of the virus. At one point on Friday afternoon the 10-year yield reached 1.1159%, marking a record low for the fourth consecutive day, after comments by Federal Reserve Chair Jerome Powell cast doubt on whether the U.S. central bank would act quickly on rates. The movement also steepened the portion of the U.S. Treasury yield curve.

"Treasuries are overbought but may stay low due to a slowdown but will spur a wave of refi’s and home sales," said John Lekas, CEO and Senior Portfolio Manager at Leader Capital.

Markets are now looking to central banks for aid in quelling the panic.



https://finance.yahoo.com/news/implied-yield-u-10-treasury-000242903.html

[Cicada]

1. The "real" yield, after inflation, is negative

Some treasury bonds are sold “inflation adjusted” meaning the holder of the bond is paid a lump sum for all the inflation which happened during the bond term, in addition to the stated yield. By comparing the price of an inflation adjusted bond with a regular bond which does not pay for inflation we can calculate, precisely, the amount of inflation the market expects. Adjusting the yield on regular bonds for expected inflation we can calculate the “real” adjusted return on treasury bonds. For ten year bonds the real yield is now negative. Bond holders will get back less, controlled for inflation, than they paid for the bond. And if you pay US taxes on the nominal bond interest, then the yield is even more negative. That’s weird.