A Global Snapshot Of Government Bond Yields

Bob Carey
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A Global Snapshot Of Government Bond Yields

View from the Observation Deck

Today's blog post shows the yields on a couple of benchmark government bond maturities from key countries/economies around the globe.
Bond yields are up from their historic lows and it looks like they have the potential to trend higher based on yesterday’s guidance from Federal Reserve (“Fed”) Chairman Jerome Powell signaling continued rate hikes moving forward to combat stubbornly high inflation.
The yield on the U.S. 10-year Treasury Note (T-note) stood at 3.53% at the close on 9/21/22, 302 basis points (bps) higher than its all-time closing low of 0.51% on 8/4/20 (not in table), but 39 bps below its 3.92% average yield for the 30-year period ended 9/21/22 (not in table), according to Bloomberg.
The yield on the U.S. 2-year T-note stood 52 bps higher than the yield on the 10-year T-note at the close on 9/21/22 (see table), which means the yield curve is severely inverted. Over the past 30 years, the yield on the 10-year T-note exceeded that of the 2-year T-note by an average of 111 bps, according to Bloomberg.
As of 9/21/22, the federal funds target rate (upper bound) stood at 3.25%, above its 30-year average of 2.46%. The Fed hiked rates by 75 bps in June, July and September, the fastest pace since 1994.
With the rise in government bond yields throughout much of the globe over the past year, the amount of negative-yielding debt has declined significantly, as measured by the Bloomberg Global Aggregate Negative Yielding Debt Index. The total value stood at $1.90 trillion on 9/21/22, down from $14.53 trillion a year ago.
We will continue to monitor the situation to see if high inflation plus any tapering the Fed does to its balance sheet of assets is enough to push bond yields higher in the months ahead.

This chart is for illustrative purposes only and not indicative of any actual investment.

Download a PDF of this post, please click here.

Posted on Thursday, September 22, 2022 @ 11:18 AM • Post Link

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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

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