The importance of today’s closing yield in the 10 yr

To put today’s 10 yr note yield of 3.11% into perspective and its huge relevance, taking out the sharp drop in interest rates in late ’08, early ’09 due to the obvious financial collapse fear flight to safety trade, the last time the 10 yr bond yield closed at 3.11% was on June 13th, 2003, almost two weeks before Greenspan cut rates to 1% due to the Fed’s deflation fears. The closing low on that date at the time was a record low dating back to at least 1962 and was only first breached in Nov ’08. The level also came 7 months after Bernanke gave his famous “Deflation: Making sure ‘it’ Doesn’t Happen Here” speech where he talked about dropping money from a helicopter if need be.

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