Chart of the week: Treasury rates remain range-bound
- Markets have behaved in a generally uncharacteristic manner since the FOMC hiked interest rates at its meeting last week. The U.S. dollar index is down nearly 90 basis points since the FOMC made its move on March 15 while the 10-year Treasury note has fallen approximately 8 basis points.1,2
- Looking over a longer time frame, the yield on the 10-year U.S. Treasury note climbed steeply amid the broad market rally immediately after the U.S. presidential election. Following the initial climb, however, the yield has since generally remained range-bound, between approximately 2.3% and 2.6%.1
- Indeed, a wide range of consumer and investor sentiment metrics, from the University of Michigan Index of Consumer Sentiment to the Small Business Optimism Index, remain at or near their recent highs, appearing to justify the Treasury note’s initial jump.3,4
- Judging by recent market movements, however, including that of the 10-year Treasury note, investors seem to be scaling back earlier predictions that a new era of higher economic growth and inflation has emerged.
- With that, long-term interest rates continue to be relatively low by historical standards and investors seem to be confirming that we have not yet exited the “lower for longer” environment of recent years.
1 Federal Reserve Bank of St. Louis, http://bit.ly/29ecBfp.
2 Bloomberg Dollar Spot Index.
3 University of Michigan surveys of consumers, http://bit.ly/1gDEQwe.
4 NFIB, Small Business Economic Trends, March 2017, http://bit.ly/Lg4Ndz.
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