I was just marveling how the ten year bund was at 2% last Friday...well today, the next trading day, the ten year bund yield fell 15 basis points to 1.85%. And this is the 2nd day of 15 bp declines in a row.
15 bp is a lot when the yield is at 5%, when the yield is at 2% it is ...words fail me. This is a long-term instrument, not some short-term paper where close to zero rates can arise under reasonable policies. No reasonably policy will ever get you into a setting where a 2% 1.85% yield happens on a 10 year treasury. This is much more worrisome than a 5% decline in the stock market by itself would be (and the stock market decline is in part a reflection of what is going on in the fixed income markets).
I'm glad I'm not trading anymore and I feel sorry for the good optimistic portfolio managers being wiped out here.
Right now, checking the 10 year US treasury, it's yield is 1.925%, down only 6 bp from Friday evening.
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