Treasury Yields Near All Time Lows, Sentiment is Diverging From the Data

The 10 year Treasury is now at 1.46%, just 10 bps above the all-time low (summer 2016). The bond market continues to ignore U.S. economic reports and concentrate on global fears. Remember when positive Consumer Confidence and Durable Goods reports would drive yields up? Those days are in the rear view mirror as the markets are “obsessed” with gloom on the horizon. US/China trade: the consensus is that China is preparing for a long dispute. Brexit: The suspension of Parliament (suggested by Boris, approved by the Queen) could result in a messy and disorderly split between the UK and the EU, with unforeseen consequences that are hard to quantify. Hong Kong: another potentially volatile situation in a major trading hub. We are seeing many lenders trying to figure out spreads and floors on fixed rate loans. Many are flooring rates near 4.00%, while others are quoting and closing under 3.50% on 10 year money (!), Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

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