• Stocks moved higher again this week as investors looked past economic and geopolitical news toward a post-lockdown economy. U.S. Treasury markets, however, have yet to show signs of such optimism.
  • In fact, the 10-year U.S. Treasury yield has flatlined over the past six weeks, trading within a very tight range of 0.60%–0.70%, just above its all-time low of 0.56% reached in late March. The MOVE Index, which measures expected rate volatility in the Treasury market, has quickly declined to pre-COVID-19 levels, indicating that investors don’t expect large moves soon.
  • The chart looks at Treasury yields since the COVID-19 pandemic began compared to yields at the time of the global financial crisis.It highlights both the depth and speed at which yields have fallen in the current crisis as well as their significantly lower starting point compared to the global financial crisis.
  • The chart also shows how static the 10-year yield has been – near zero – over the past six weeks compared the last recession, which saw ups and downs amid the broader trend lower.
  • Minutes released this week from the Fed’s April meeting affirmed policymakers’ intentions to keep short-term rates anchored near zero even after economic growth begins to pick up. Against this backdrop, investors’ hunt for yield will likely remain extraordinarily difficult for the foreseeable future.

1 Federal Reserve Bank of St. Louis, as of May 21, 2020.

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