Economic Blog
The 10-year U.S. Treasury yield moved to within .05% of its recent low on Friday, January 31, approaching the 1.47% mark set back in August 2019. Prospects of stabilizing global growth and progress on trade encouraged yields to start pressing higher over the last four months of 2019; however, fears of the potential economic damage from efforts to contain the spread of the coronavirus steered investors back to the relative safety of Treasuries.
While recent declines may make it appear yields are destined to push lower, large swings in Treasury yields, both higher and lower, have been normal. As shown in LPL Chart of the Day, since the early days of the 2007–2008 financial crisis, the 10-year Treasury yield has made 15 moves of at least 0.75%, averaging a reversal about every 300 days or so, or a little less than once a year.
If we don’t break through the recent low of 1.47%, then the last move lower would be about average: a decline of 1.77% over 293 days, which is close to the average decline of 1.63% over 297 days. While we have had larger moves down, historically, a meaningful move higher would be entirely normal.
“The 10-year Treasury yield looks low to us relative to U.S. economic fundamentals and firming global growth,” said LPL Research Chief Investment Strategist John Lynch. “While we remain mindful of the risk of increased market volatility, which would probably drive yields lower, we maintain our 2020 forecast range of 2–2.25%.”
IMPORTANT DISCLOSURES
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This Research material was prepared by LPL Financial, LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
For Public Use – Tracking # 1-946996