cagkansayin Apollo’s chief economist, Torsten Slok, is raising concerns that the U.S. 10 Year Treasury yield ( US10Y ) is trading above fair value, pointing to a growing disconnect between market pricing and underlying fundamentals. While long-term interest rates are typically guided by expectations for Federal Reserve policy, Slok notes that an additional premium has emerged in recent months. He ...
cagkansayin Apollo’s chief economist, Torsten Slok, is raising concerns that the U.S. 10 Year Treasury yield ( US10Y ) is trading above fair value, pointing to a growing disconnect between market pricing and underlying fundamentals. While long-term interest rates are typically guided by expectations for Federal Reserve policy, Slok notes that an additional premium has emerged in recent months. He estimates the 10-year yield should be closer to 3.90%, rather than its current level near 4.40%, suggesting a roughly 55 basis point gap. The elevated term premium, he explains, may stem from a combination of factors, including rising fiscal uncertainty, the ongoing impact of quantitative tightening, softer foreign demand for U.S. debt, and concerns surrounding the Fed’s independence. Some investors are also weighing the possibility of future changes to the central bank’s inflation target. “The bottom line is that the 10-year yield is 55 bps higher than where it should be, and investors need to think about why,” Slok said. As of Monday, the 10-year yield stands at 4.37%, down 6 basis points. Outlined below is how the rest of the yield curve looks: U.S. 2 Year Treasury yield ( US2Y ) -6 bps to 3.87%. U.S. 5 Year Treasury yield ( US5Y ) -7 bps to 4.01%. U.S. 20 Year Treasury yield ( US20Y ) -4 bps to 4.94%. U.S. 30 Year Treasury yield ( US30Y ) -5 bps to 4.92%. Fixed Income ETFs: ( TLT ), ( TLH ), ( IEF ), ( IEI ), ( SHY ), ( SGOV ), ( SCHO ), ( BIL ), ( AGG ), ( BND ), ( VCIT ), ( MUB ), ( MBB ), ( JNK ), ( LQD ), ( HYG ), ( VTIP ), ( TIP ), ( SCHP ), ( STIP ), ( TIPX ), ( SPIP ), ( WIP ), ( GTIP ), ( LQDI ), and ( RINF ). More on markets The Market's Decline May Be Just Getting Started 20 dividend stocks to watch as the Middle East conflict continues to shake markets Citi holds firm on S&P 500 target despite Iran tensions and the current market pullback OECD lifts G20 inflation outlook as rising energy prices impact global markets U-turn? Trump has 'no problem' if a country...