Treasury Yield Spotlight: How Much Have Yields Risen From 1 Year Ago?

Are U.S. Treasury yields up or down from a year ago? The answer is yes: Both.

Reader David asks "Are we in a recession? According to the yield curve we might already be. I'm in Cleveland so it is hard to tell since we've been in a recession since about 1998."

Daily Treasury Yields 2013 to Present Daily Chart

Monthly Treasury Yields 1998-Present

No Recession Indicator Yet

The yield curve has not inverted (shorter-term treasuries yielding more than longer-term treasuries), and that's the typical recession indicator.

However, we have had recessions where the yield curve did not invert before the recession started. And we have also had inversions without a recession.

My playbook has always been the next recession will start without an inversion, but it is now increasingly likely the Fed will hike right up to the point they start slashing rates like mad, just as happened in the housing bust.

Please also see my post from a few days ago: Yield Curve to Completely Flatten in 2018: But How?

Mike "Mish" Shedlock

Impressive chart , not done with my analysis/commentary yet ,however should the date for nov be for 2016 on the first chart ? shows an unusual convergence on yields however >

Yes first date should be 2016 - will correct - thanks

The fed can't affect long term rate, just the short term through the Fed Window. The long term rates can go up if there is a lack of enthusiasm on the buying end, to attract buyers, or risk driving the interest rate up... Only thing is, nobody seems to be able to determine what risk is anymore because we have no basis for determining what the interest rate should be.

"Only thing is, nobody seems to be able to determine what risk is anymore because we have no basis for determining what the interest rate should be." Not to mention that BOJ ECB SNB are buying up anything and everything. How can one measure risk when the central banks are promoting a scheme to pretend it doesn't exist any more? It is the biggest financial fraud in the history of the world.

Greggg, right you are, and as the contagion of govt and CB mistrust spreads through the periphery it will further expose the fragility of our debt-based financial system. As risk and rates in the European and Japanese banking systems rise the dollar will continue to rise, exacerbating the debt issue caused by holding too much dollar-based debt.

As the rising dollar kills exports and govt pension insolvency hits home, the risk of holding US govt debt long term will also rise. We are heading into a world that no trader alive has ever experienced, and traditional metrics will be worthless. The volatility and no-bids will leave brokers and their 3rd party clearing houses exposed, and FDIC insurance worthless in a systemic financial reset.

The price of real estate, paintings, collectible cars, and other popular destinations for fear capital trying to get off the grid can only rise so far. Gold and silver will get their share of capital, especially from the old timers that don't understand the global movement to digital currency. However, more people around the world are increasingly turning to Bitcoin and other cryptocurrencies that enable them to fully get out of the system, be their own bank, easily move their wealth across boarders, and directly invest in the technologies of the future without having to go through the system / establishment. Bitcoin is the ultimate anti-establishment tool.

If you haven't bought yourself some Bitcoin, Ethereum, or Litecoin, Coinbase offers the easiest way. Try a couple hundred dollars to prove it to yourself. The unitial purchase will take a week, as they verify everything, but it's supper easy - https://www.coinbase.com/join/5a011cf06f9f0000e9a8ea4e.

There will be another ramp in price by Feb, and as the sovereign debt big bang gets into full swing next year, Bitcoin will transition through the early adopter stage to the mainstream very quickly. Clif High is a good source of information - https://youtu.be/NbIejrnQtd4.

10 years is the longest previous timeframe between recessions and we are approaching that, even an economic neophyte as myself can read the writing on the wall and know that a recession is likely sooner than later. I believe that I read somewhere that the smallest interest rate cut during a recession was 2.03% during the 1990-91 recession. Assuming a recession in the near future even with a few more fed hikes and just matching the smallest decrease of 2.03% puts us at negative rates.

"My playbook has always been the next recession will start without an inversion, but it is now increasingly likely the Fed will hike right up to the point they start slashing rates like mad, just as happened in the housing bust." I'm just wondering what more we can expect beyond lower rates (possibly negative) and more QE?

@Greggg:

The Fed very much suppresses the long end as well, albeit indirectly. Simply by being assumed to stand ready to buy enough new issue short paper, to allow the government to continue servicing longer term debt, come what may. Hence, at least in the minds, and models, of those who do most buying, severely reducing perceived default risk.

Just imagine the effect on Japanese long bonds, if the BOJ simply ceased to exist. US long bonds differ only by a matter of degree. While Central Bank actions may result in bond holders getting repaid in debased Yen and Dollars, hence increasing rates; the alternative would result in, at least the Japanese ones, and soon to be US ones as well, not getting repaid at all. As it should, but unfortunately doesn’t look like it will, be.

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