1 Treasury Yields: A Long-Term Perspective May 1, 2019 by Jill Mislinski of Advisor Perspectives Let's have a look at a long-term perspective on Treasury yields as of the April 30, 2019 close. The chart below shows the 10-Year Constant Maturity yield since 1962 along with the Federal Funds Rate (FFR) and inflation. The range has been astonishing. The stagflation that set in after the 1973 Oil Embargo was finally ended after Paul Volcker raised the FFR to 20.06%. The last couple of years have been remarkable ones for yields. The 10-year note hit its historic closing low of 1.37% in July of 2016 and then rose 114 BPs to 2.51% as of the April close. Page 1, ©2019 Advisor Perspectives, Inc. All rights reserved.
2 Now let's overlay the S&P 500 to see the historical pattern of equities versus treasuries. This is a nominal chart, which significantly distorted the real value of both yields and equity prices. Page 2, ©2019 Advisor Perspectives, Inc. All rights reserved.
3 Here's the same chart with the S&P 500 and 10-year yields adjusted for inflation using the Consumer Price Index. The impact of stagflation becomes much clearer. We can better understand the severity of the decline in equities from the mid-1960s to the bottom in 1982. And we can also see why high yields can be deceptive in periods of double-digit inflation. Page 3, ©2019 Advisor Perspectives, Inc. All rights reserved.
4 The most interesting series in the charts is the FFR red line. We can see how the Fed has used rate to control inflation, accelerate growth and, when needed, apply the brakes. The FFR was virtually zero from 2008 through 2016 and has proven to be a poor tool to stimulate the economy. Incidentally, we've annotated the top chart with the tenures of the last three Fed chairmen so we can see who was managing the various FFR cycles since the summer of 1979. The next chart is based on daily data and adds some additional Treasuries for a close look at yields since 2007. Page 4, ©2019 Advisor Perspectives, Inc. All rights reserved.
5 Page 5, ©2019 Advisor Perspectives, Inc. All rights reserved.
6 Now let's see the 10-year against the S&P 500 with some notes on Fed intervention. Page 6, ©2019 Advisor Perspectives, Inc. All rights reserved.
7 We update the long-term charts periodically and the last chart more frequently, depending on yield volatility. Other Treasury Updates: Treasury Yield Snapshot Page 7, ©2019 Advisor Perspectives, Inc. All rights reserved.
U.S. DEPARTMENT OF TRANSPORTATION ORDER FEDERAL AVIATION ADMINISTRATION 7400.11C JO Air Traffic Organization Policy August 13, 2018 SUBJ: Airspace Designations and Reporting Points . This O rder, publ...More info »
Stern Review: The Economics of Climate Change PAGE TABLE OF CONTENTS i-xxvii Executive Summary i Preface & Acknowledgements iv Introduction to Review vi Summary of Conclusions Part I Climate change: o...More info »
MANAGING THE RISKS OF EXTREME EVENTS AND DISASTERS TO ADVANCE CLIMATE CHANGE ADAPTATION SPECIAL REPORT OF THE INTERGOVERNMENTAL PANEL ON CLIMATE CHANGEMore info »
TIONAL ACADEMIES PRESS THE NA This PDF is available at http://nap.edu/24938 SHARE Thriving on Our Changing Planet: A Decadal Strategy for Earth Observation from Space DET AILS 700 pages | 8.5 ...More info »
The Health Consequences of Smoking—50 Years of Progress A Report of the Surgeon General U.S. Department of Health and Human ServicesMore info »
p a s r e p o r t 5 7 6 PLANNING FOR POST-DISASTER RECOVERY: NEXT GENERATION Editor aicp James C. Schwab, ,More info »