Treasury Almost Hits Historic Low

The U.S. 30-year Treasury bond is nearing its lowest level in history ever, closing Monday just three basis points above the previous all-time low of 2.10% set in July 2016 just after the U.K voted to leave the European Union.

A drop of 13 basis points on Monday took the 30-year to 2.13%, as the combination of factors, including a lack of inflation, expectations for more easing from the Federal Reserve and other global central banks, and a growing number of government bonds with negative yields, have been causing investors to continue buying U.S. government debt.

Just as recently as November the so-called “long bond” hit a multiyear peak of 3.46%, but since then the yield has been slipping consistently lower as the U.S. central bank has become increasingly dovish, actually cutting rates for the first time in over a decade this past July.

The more closely watched 10-year Treasury note has also been falling steadily since November, but it remains nearly 40 basis points from its all-time low of 1.27% hit in July 2016 as it closed Monday at 1.64%.

The rising prices of longer dated bonds, and subsequent lower yields, have come as various surveys and data points have been pointing to slowing inflation. Currently traders expect consumer inflation to average just 1.66% over the next ten years.

Also playing into the increased expectations for slowing inflation has been the inability of global central banks to hit their inflation targets, despite years of monetary stimulus.

The most bearish of analysts fear the falling yields are indicative of a coming recession.