The table above was constructed right before the payroll report. It shows a snapshot of the lowest 10-year yields on the planet. The US has the 11th lowest 10-year yield. The Swiss yield of 0.48% is the lowest 10-year ever recorded anywhere.
So while we will all stop and stare in awe at the US 10-year note, there are numerous 10-year yields lower around the world showing how intense the flight to quality bid has become.
Bloomberg.com – Yielding to Panic
All that history be damned; on Thursday the 10-year Treasury touched a record-low yield of 1.5309 percent. Thirty-year bonds, for their part, fell to a yield of 2.6 percent, which is just above the all-time low they set in the midst of the Panic of 2008. Apparently our times are so fraught with fear and the need to flee to safety that the Treasury market is pricing in historic amounts of misery. As the Wall Street Journal’s Dennis Berman tweeted, “Even in ancient Babylon (4%), Medieval Europe (6%), 1800s America (4%), no one was paying 1.6% for 10-year money.” Why would anyone loan money to Uncle Sam for so long at so little? After all, it’s not like our fiscal prospects are such great shakes. Surely there must be a price to pay for epic amounts of monetary stimulus—three-plus years of zero-interest-rate policy, two rounds of quantitative easing—and Washington’s inability to balance its books. But the consensus is apparently that we’re less doomed than our cousins across the pond, so much so that the hunger for U.S. debt becomes increasingly rapacious with every new turn of the global financial crisis. “If you look at the global marketplace, we are the supermarket of safety,” says William Larkin, a bond manager at Cabot Money Management. “We’re talking about an elevated level of fear. This is mainly driven by growing uncertainty in Europe. People are saying ‘I can buy the Treasury, and I know my money will be returned to me.’”
The Financial Times – German 2-year bond yield turns negative
Germany’s two-year bond yield turned negative for the first time, and Berlin’s 30-year borrowing costs fell below those of Japan, as investors sought shelter in Europe’s safest assets over concern that policy makers were unable or unwilling to stem the region’s debt crisis. The 10-year benchmark bond yields of the UK and the Netherlands fell below 1.5 per cent, and Denmark’s comparable bond yield fell under 1 per cent, even as the eurozone periphery bond yields edged up again, underscoring the “flight to safety”.
Source: Bianco Research