There are several reasons why long-term Treasury yields remain low. One obvious reason is the slowdown in growth we've experienced this year...both here in the U.S. and around the globe. However another reason is the ultra low level of interest rates (negative rates in many areas) in other parts of the world...like Germany.
However, those overseas rates have definitely bounced off of their 2019 lows...and this is something that has been going on for several months now...so it cannot be seen as merely a short-term technical rise in rates.
Don't get us wrong, we'd have to see a much larger move in rates in places like Germany before we could say that the long-term trend in rates had been reversed. However, it won't take a much further rise to declare that an intermediate-term change in trend has indeed taken place.
The level we're watching closely is -0.2% on the 10yr German bund. If it breaks above that level in any significant way, it will be a very important development. Not only should it impact U.S. interest rates, but it could/should have an impact on the broad U.S. stock market...and it should definitely have an impact on the interest-rate sensitive groups in the U.S. market.
For more specific details on this issue...including the charts on the German 10yr bund...and to get notes like this on a daily basis, please click here to subscribe to my investment newsletter, "The Maley Report" (TheMaleyReport.com).
Matthew J. Maley
Chief Market Strategist
Miller Tabak + Co., LLC
Founder, The Maley Report
275 Grove St. Suite 2-400
Newton, MA 02466
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