Treasury Yields Without The Hype: A Chart Analysis

Inflation numbers and treasury yields, it’s a relationship like no other. Are they married to one another? Are they just friends? Who knows?

Whatever the case, it’s a fact that the yield on the 10-Year Treasury Note is already back to the level it showed just late last week.

When the consumer price index Tuesday morning came in with “less-than-expected” figures, indicating a possible slight shrinkage of inflation, Treasuries found buyers on the expectation that the Fed would now be done with rate rising and perhaps on the verge of rate cutting.

Stock buyers displayed exuberance, the Nasdaq 100 made it back up to the summertime highs and then, today, sold off again along new selling in Treasury bonds.

Treasury Yields Charts.

Yields on the longer-term Treasury bond, the 30-year variety, look like this:

After peaking in mid-October at 5% (the chart shows basis points), bonds rallied late in that month and then continued into November’s CPI release that came on Monday. After dropping to nearly 4.6%, the 30-Year yield today made it back up to almost 4.7% as some investors developed a few second thoughts.

Here’s the yield chart for the 10-Year Treasury Note:

You can see that it’s the same basic pattern as the 30-Year but with slightly lower yields. The T-Note yield did not quite hit 5% in October but came close and has now dropped to 4.535%. It’s standard stuff for the 10-Year to offer a somewhat lower yield than the 30-Year — investors are rewarded for staying longer.

The yield chart for the 3-month Treasury bill is here:

T-bill yields reached as high as 5.35% in early October and have now dropped to 5.255%. Note that back in mid-March, the yield hit a low of 4.3%. It’s come a long way in a short time.

It’s an unusual phenomenon for this very short-term Treasury vehicle to offer a yield greater than both the 30-Year Bond and the 10-Year Note. This is the reason for references in the financial media to the strangeness of the “yield curve” — fears of greater inflation and possibly higher interest rates remain.

Here’s the daily price chart for the benchmark bond fund, the iShares 20+-Year U. S. Treasury Bond ETF:

Buyers began to show up in late October and then in substantial numbers by early November. The bond rally has been strong enough to climb above the declining 50-day moving average (the blue line) and close higher for at least 3 sessions. The price remains below a down trending 200-day moving average (the red line.)

Of course, it’s more than just the inflation reading. There’s a sense that the U. S. political dynamic is a problem for the bond market as the nation heads into the 2024 election season.

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