Bond market is warning of caution that the stock market is ignoring
yield has dipped to 1.68%, its lowest level since the beginning of November, and it could keep moving lower.
"The question is what's the economy going to do this year, and I think right now the 10-year note is saying we don't really know, but given what we've seen in 2020, it's telling us we should hedge the other way," said Gregory Faranello, head of U.S. rates at AmeriVet Securities. The softness in recent labor data and lack of inflation have also been factors, and Faranello said there are concerns that Boeing's problems could crimp U.S.
"You have global central banks on hold. You have a growth and inflation environment which is relatively benign. We're not in a recession and won't be any time soon." "That grind lower we've seen in rates so far this year, indicates there's a little bit of a pain trade from some who thought rates were going higher," said Jon Hill, senior rate strategist at BMO.
The combination of the Fed's easy policy and those of other central banks has made U.S. assets particularly attractive. While the Fed keeps interest rates low, bankers in Europe and Japan have negative yields, and that is another factor pushing investors into the U.S. bond market—and also stocks.
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