Blokland’s daily sketch

Blokland’s daily sketch


10-year US Treasury yield below 2%

  • Jeroen Blokland
    Portfolio Manager

The 10-year US Treasury yield has fallen below the 2% threshold, following yesterday’s FOMC meeting. Eight out of the 17 policymakers signaled lower Fed rates this year, with seven expecting at least a 0.50% cut. Together with lower inflation expectations, with the central bank now expecting core inflation to average 1.5% this year, a rate cut in July seems a done deal. Fed Jerome Chairman Powell did, however, mention several times that he and his colleagues will be eyeing the incoming data between now and the next FOMC meeting. Not cutting rates would lead to a severe downturn in risky assets, as markets have priced in a significant amount of monetary loosening. As a result, the world’s most watched bond yield has collapsed from over 3.20% to below 2% in just over six months.

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As a senior portfolio manager I use charts to illustrate financial issues every day. I tweet my favorites as @jsblokland and was named 'one of the 50 most important people for investors to follow in 2018' by MarketWatch.
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