LPL Market Signals: What’s happening with bond yields?

Market Blog

Thursday, August 12, 2021

Why Are Yields So Low?

This week in the LPL Market Signals podcast, Ryan Detrick is joined by Marc Zabicki and Lawrence Gillum, where the team discusses one of the big questions lately: how in the world are bond yields so low?

Coach K

Coach K was a speaker at LPL Focus this year and the team dives into his amazing speech. Ryan points out how Coach K stressed to live in the moment. There are so many things happening at once these days, but focusing on the moment is one way to find success. It was a memorable discussion that the LPL Research team will not soon forget.

Let’s Talk About Bonds

The guys had a fun discussion about potential new leadership at the Fed, but the consensus remains that Powell will get a second term next February. The conversation then shifted to bonds and why yields may be so low. Lawrence noted that yields might look low here, but overseas yields are actually quite high. In other words, with more than $16 trillion in negative yields around the globe, our 10-year Treasury yield at 1.25% actually might not be as low as it seems. Marc and Lawrence both noted that low yields have many concerned about the bond market, but that action in the credit markets is still extremely healthy and shows no signs of stress. If a new recession was coming, we’d likely see more worrisome indicators in the credit markets.

See enlarged chart.

Tune In Now

Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunesGoogle Podcasts, or Spotify and find us on the LPL Research YouTube channel.

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