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Why Treasury Yields Don’t Exceed 3%

Last update on: Jun 05 2020

Since the Federal Reserve began tightening monetary policy, many economists expected yields on treasury bonds to exceed 3%. Investors were burned for several years by betting on higher rates as rates stayed stubbornly low. Even now after rates finally are well above their lows, treasury yields won’t stay above 3% for long.

This article gives 10 reasons the author thinks are keeping treasury yields below 3%. The author says the issue is important, because the Fed definitely wants interest rates to rise. If the Fed keeps raising short-term rates but other factors keep long-term rates from rising, the economy could be in big trouble.

The markets better pay attention to the major reasons that are keeping Treasury yields so much lower than many experts and forecasters have called for. These reasons also may keep the longer-dated Treasury yields lower for the rest of 2018 and even into 2019.

It’s important to keep in mind that nothing lasts forever. And there is also the theory that high prices cure high prices and low prices cure low prices. Is the same true of interest rates?

While we have identified 10 reasons keeping longer-term interest rates at or under the 3% mark, there are arguably many other reasons that could be represented, and the following are not ranked in any specific order.




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