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Treasury Yields: Quick Update

Published 09/09/2012, 01:09 AM
Updated 07/09/2023, 06:31 AM
What's New

: I've updated the charts through Friday's close. The S&P 500 closed the week at a new interim high. The index is now up 14.34% for 2012. From a longer-term perspective, the S&P 500 is 112.5% above the March 2009 closing low and 8.1% below the nominal all-time high of October 2007. The speculation was rampant that Friday's disappointing jobs report could trigger another round of QE, perhaps as early as September 13th, in which case I'll be redesigning the last chart below.

As for the Fed's, Operation Twist, here is a snapshot of selected yields and the 30-year fixed mortgage since the inception of program.
Operation-Twist
The 30-year fixed mortgage at current levels no doubt suits the Fed just fine, and the current low yields have certainly reduced the pain of Uncle Sam's interest payments on Treasuries. But, as for loans to small businesses, the Fed strategy is a solution to a non-problem. Here's a snippet from a recent NFIB Small Business Economic Trends report:

Ninety-three (93) percent of all owners reported that all their credit needs were met or that they were not interested in borrowing. Twenty-nine percent reported all credit needs met, seven percent reported that not all of their credit needs were satisfied and 51% said they did not want. Only 3% reported that financing was their top business problem.

A Perspective on Yields Since 2007
The first chart shows the daily performance of several Treasuries and the Fed Funds Rate (FFR) since 2007. The source for the yields is the Daily Treasury Yield Curve Rates from the US Department of the Treasury and the New York Fed's website for the FFR.
treasuries-FFR-since-2007
Now let's see the 10-year against the S&P 500 with some notes on Fed intervention.
SPX-10-yr-yield-and-fed-intervention
For a long-term view of weekly Treasury yields, also focusing on the 10-year, see my Treasury Yields in Perspective.

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