Long History of U.S. 10-Year Treasury Yields Despite expectations of rate cuts, U.S. interest rates could move in either direction, depending on inflation and Fed decisions. Image: Goldman Sachs Global Investment Research Click the Image to Enlarge
U.S. 10-Year Real Yield (TIPS) The relative stability of the U.S. 10-year real yield has created a market environment where investors have become accustomed to these levels. Image: Deutsche Bank
10-Year U.S. Treasury Yield vs. U.S. Dollar Index (DXY) While the strong relationship between U.S. Treasury yields and the dollar has lasted for over a year, investors should remain aware that market dynamics can shift rapidly. Image: Morgan Stanley Research
Probability of U.S. Recession Calculated from the Yield Curve The probability of a U.S. recession in 12 months, calculated from the yield curve, stands at 21% in January. Image: Federal Reserve Bank of Cleveland
U.S. High Yield Corporate Bond Spreads While tight high-yield credit spreads often indicate strong market confidence, they can also be a warning sign of excessive investor complacency. Given this dual nature, it’s crucial for investors to monitor credit spreads closely. Image: Topdown Charts
Valuation – S&P 500 Forward P/E Ratio vs. 10-Year U.S. Treasury Yield The 10-year U.S. Treasury yield surpassing 4.5% is creating a headwind for equity valuations and potentially dampening investor sentiment. Image: Morgan Stanley Wealth Management
Average U.S. 10-Year Treasury Yield Performance in Fed Rate Cut Cycles Since 1966, the current Fed easing cycle has resulted in the second-worst performance of 10-year U.S. Treasury bonds. The only period with worse performance was in 1981, during Chairman Paul Volcker’s aggressive measures to combat inflation. Image: Deutsche Bank
Copper to Gold Ratio and U.S. 10-Year Treasury Yield (Leading Indicator) The copper/gold ratio and the 10-year U.S. Treasury yield are showing signs of a persistent divergence. Image: Morgan Stanley Research
China – Nominal GDP Growth vs. 10-Year Government Bond Yield The persistent drop in bond yields is often seen as a sign of increasing investor caution regarding economic growth, which does not bode well for China’s nominal GDP growth moving forward. Image: Alpine Macro
Survey – Where Do You Expect 10-Year U.S. Treasury Yields to Be One Year from Now? The average yield for the 10-year U.S. Treasury is projected to be around 4.2%, with only 4% of respondents believing that yields will exceed 5% by the end of 2025. Image: Deutsche Bank
10-Year U.S. Treasury Yield Fair Value The fair value model for the 10-year U.S. Treasury yield, based on market variables, suggests a fair value close to 4.10%. Image: Deutsche Bank