After falling steadily from mid-March to early-May, the yield
on the 10-year U.S. Treasury note has risen rather sharply over
the last two weeks. You can see this reversal in the chart below:
Of course, you have to put this in its historical context. The
10-year Treasury yield is still ridiculously low compared to its
long-run median of 6.6%.
And we have seen sudden rises in the 10-year before that
looked like yields would start "reverting towards their mean",
only to see the trend quickly reverse (see October 2011 and March
2012 in the first chart above).
This could very well end up being just another head fake, with
the 10-year staying within the same range of 1.4% and 2.4% that
it has since August 2011.
Ben Bernanke and the Fed certainly don't want to see yields
move higher. The central bank continues to buy $45 billion in
Treasury bonds as part of QE3.
But what do you think is causing the sudden rise in the
Could it be a "risk on" move by investors as they rotate out
of bonds and into stocks? Are inflation concerns starting to
finally creep into the market? Or is it just more noise within a
range for the 10-year?
Chime in below.
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