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10-Year Treasury Yield Implodes Despite Relentless Equity Market Recovery


Despite a massive post-Brexit recovery rally in the global equity markets that should have calmed investor fears that last Friday precipitated another flight to safety into US Treasuries from around the globe, 10-year YIELD continues to plunge-- investors continue their near-panic demand for longer-term Treasury paper, even though it is yielding a very puny 1.43 percent!

Furthermore, today's low yield is testing the prior all-time low yield established on July 25, 2012, at 1.38%.

If we did not know better, we should think that the world economy in general, and the US economy in particular, are going into or already are in a deflationary recession (aka a Depression).

The fact is, though, that most analysts and strategists will look at us with a straight face and suggest either that the US is relatively healthy at its anemic 2% GDP, or that it is in fact strengthening, which require higher rates sooner than later!

From my perspective, all the many Fed experiments with Easy Money, QE, and bond market tinkering have created all sorts of distortions that have forced investors into puny-yielding bonds and overvalued equities.

Congrats to the Fed: mission accomplished! There is nowhere for investors to make a return in stocks and bonds unless they are prepared to undertake enormous, and still rising, risk.

This contrived situation will end badly, but who knows when?

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