US bond yields are absurdly low right now

[Beet]

We must be approaching some kind of record.

Edit: Okay, here we go, an article:

"The latest investor push into longer-dated Treasuries sent 10-year yields down to 1.627 percent, which is at least a 60-year low based on monthly figures gathered by Reuters. Even though the housing market is still struggling, the one silver lining from this drop in Treasury yields is even lower interest rates on mortgages. Lower mortgage rates could spur home sales which would boost a still fragile real estate market and refinancing would put more cash into homeowners' pockets. U.S. fixed 30-year mortgage rates averaged 3.91 percent last week, a record low, the Mortgage Bankers Association said on Wednesday."

http://www.foxbusiness.com/economy/2012/05/30/10-year-treasury-yield-sinks-to-60-year-low-amid-euro-worries/

[TheDeadFlagBlues]

Clearly we must cut spending dramatically to please the bondholders.

[HighPlainsDrifter]

10 year could hit 1.00% by end of year

[○∙◄☻¥tπ[╪AV┼cVê└]

Clearly we must cut spending dramatically to please the bondholders.

That seems to be what Obama's pals in the Chicago economics department are telling him to do.

[Beet]

7- and 10-year TIPS are now in negative territory, with the 20-year TIPS approaching there soon.

German and UK yields also plummeted.

"The 10-year bund rate dropped two basis points to 1.18 percent after reaching 1.148 percent, the lowest since Bloomberg began collecting the data in 1989. Its seven-week advance is the longest run since May 27 last year. Five-year yields reached an all-time low of 0.318 percent and 30-year bond yields touched 1.654 percent. Yields on U.K. gilts of all maturities dropped to less than 3 percent for the first time."

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/06/01/bloomberg_articlesM4XDB36JIJUY01-M4XTS.DTL#ixzz1wfMjDuxA

[HighPlainsDrifter]

Obama already used his political capital on his failed stimulus package.  The problem was not the amount he spent, but what he chose to spend it on.

[crypto-fascist superhero]

Clearly we must cut spending dramatically to please the bondholders.

Clearly we must cut spending dramatically to please the bondholders.

That seems to be what Obama's pals in the Chicago economics department are telling him to do.

I could just passive-aggressively post these in the absurdity mine; but I'll be nice and explain that the reason why bond yields are so low is because the Federal Reserve has set a target interest rate and will purchase bonds (i.e. create money out of thin air, devaluing the dollar) in order to maintain that rate.  The Fed has been buying 61% of the bonds at auction of late.  The Fed has never allowed treasury bonds to trade at market interest rates except for under Paul Volcker in the early 80s (when they traded at interest rates between 10 and 16%).

[opebo]

Actually bond yields are much too high.  This is the whole problem with deflation - even with bond-yields of 0%, you still have high interest rates.

[Yelnoc]

Right, so I don't understand economics.

Any suggestions on who/what to start reading?

[opebo]

Right, so I don't understand economics.

Any suggestions on who/what to start reading?

No need.  If deflation is say 3-5% per year, as it is now, and interest rates are, for example 1%, then the 'real interest rate' is 4-6% per year.

We need to create inflation to make bond yields negative in real terms - growth can only occur when the State creates demand and supply.  We do that by supplying money to the consumer and the producer - through subsidy, redistribution, printing, fiat.  Another way to look at this is the State commands people to do things (produce and consume) which they cannot do 'on their own'.

The recent and on-going collapse of the economy was caused by the cessation of these necessary State roles from 1980s onward.

[Torie]

We need to create inflation to make bond yields negative in real terms

That's why long term bonds are the equivalent of hell, and TIPS are the equivalent of heaven. Pity that the government has been so stupid as to reduce the overall duration of its debt issuances over time.

[opebo]

We need to create inflation to make bond yields negative in real terms

That's why long term bonds are the equivalent of hell, and TIPS are the equivalent of heaven.

Except for the fact that there will be no inflation, Torie.  Inflation is my prescription, and my prescription, like my point of view, is not accepted.  Deflation is the order of the game for a generation or two, a-la Japan, or US post-'29.

[Torie]

We need to create inflation to make bond yields negative in real terms

That's why long term bonds are the equivalent of hell, and TIPS are the equivalent of heaven.

Except for the fact that there will be no inflation, Torie.  Inflation is my prescription, and my prescription, like my point of view, is not accepted.  Deflation is the order of the game for a generation or two, a-la Japan, or US post-'29.

Then buy long bonds guy with your inheritance. I will drop by from time to time to give you care packages when you end up in the poor house. As you know, I like visiting Thailand to enjoy the "scenery."

[Simfan34]

Right, so I don't understand economics.

Any suggestions on who/what to start reading?

The Wealth of Nations
The General Theory
A Monetary History of the United States
Stability with Growth
The Ascent of Money
&
An economics textbook

[opebo]

Then buy long bonds guy with your inheritance.

My investment strategy is to spend the money.

[Tender Branson]

While Spain is around 6.5% and Italy above 6%, Austria's bond yields have dropped to a new low of 2.36%, which is the lowest yield since statistics started in 1949.

So, why again did S&P downgrade us from AAA ?

[opebo]

While Spain is around 6.5% and Italy above 6%, Austria's bond yields have dropped to a new low of 2.36%, which is the lowest yield since statistics started in 1949.

So, why again did S&P downgrade us from AAA ?

Presumably they assume Spain and Italy will drag you down?

[HighPlainsDrifter]

I still think the 10 year could hit 1%...but they seemed to have taken a rest in the 1.60ish range.

[Link]

7- and 10-year TIPS are now in negative territory, with the 20-year TIPS approaching there soon.

Damn those bond vigilantes.  We have no one to blame but ourselves.  We were warned.