US 30-Year Bond Yield Tumbles to Record Low Under 2%

Fear is back in a big way.

Markets are lower across the board this morning thanks to falling bond yields.  

In fact, the 10-year has again fallen below the two-year this morning.  At the moment, the yield on a 10-year is 1.463%, as compared to 1.51% on a two-year.  That, of course, raises concerns about the health of the U.S. economy, and is seen as an indicator of potential recession. 

Making things a bit worse, the yield on the 30-year is below 2% again to 1.906%, hitting a new record low.  That broke below its prior all-time low of 1.916% hit earlier this month. And, for the first time in 10 years, the S&P 500 dividend is yielding more than the 30-year bonds.  At that time, we were knee deep in a recession.

However, while things may appear bad, some analysts think fears are overblown.

For example, MRB Partners believes thinks recessionary fears may be overblown.

“The yield curve’s inversion this year is a symptom of external growth stress and powerful distortions in global bond yields and does not reflect restrictive Fed policy,” they said, as quoted by CNBC.  “Even if the inverted yield curve captures investor’s uncertainty about worsening global growth … a balanced perspective would still suggest that the odds of a recession in the next 12 months are no higher than 20%.”

Some deem that to be wishful thinking, though.

Remember, the trade war could be strained further with the White House scheduled to impose the first set of tariffs on $300 billion worth of Chinse goods on Sunday.  China is set to respond with tariffs of its own on the same day.  

At the moment, it’s all a wait-and-see as to what happens next.