Courtesy of Pam Martens
The Federal Reserve Building in Washington, D.C.
On November 9 of last year, a mere six months ago, we asked the question: “Does Jerome Powell Hear the Alarm Bells from Flattening Yield Curve?” Jerome Powell is, of course, the new Chairman of the Federal Reserve — the U.S. central bank and the body in which the United States has entrusted its monetary policy, for better or worse.
We wrote at the time:
“As of 7:48 a.m. this morning, the spread between the 10-year Treasury Note (yielding 2.33 percent) and 30-year Treasury Bond (yielding 2.81 percent) is even smaller, at a meager 48 basis points or less than half of one percent.
“It is a serious commentary on the bizarre financial times in which we live that a fixed income investor would be rewarded with less than half a percent of additional income to add 20 years of risk to the maturity date on his bond.”
Buckle up your seat belt because things have gotten a lot dicier since we penned that commentary. As of this morning at 6:41 a.m., the 10-year U.S. Treasury was trading at a yield of 3.06 percent while the 30-year U.S. Treasury was yielding a feeble 3.19 percent. The spread, meaning the difference between the two yields, has shrunk from 48 basis points on November 9 to a startling 13 basis points today.
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