Interpreting the U.S. Bond Rally

Interpreting the U.S. Bond Rally

By Blu Putnam, Chief Economist, CME Group


  • U.S. 10-Year Treasury yields have declined from 3.2% to 2.2% since Oct 2018
  • Are low yields a signal of a coming recession, or just decelerating growth?
  • Subdued inflation is diminishing risk premium in bond yields
  • Zero German and Japanese bond yields are pulling U.S. yields lower
  • Trade war has capped equity rally; data-driven Fed not ready to lower rates
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CFTC Study Showcases Treasury Futures Liquidity

In December 2018, the CFTC published a study on U.S. Treasury market liquidity. Among the study’s findings, the 10-Year Note futures contract has the largest share of risk transfer (DV01) among the instruments studied, and its share grows during times of higher volatility and during non-U.S. hours.
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