Tuesday, 3 March 2009

Long term US Treasury yields barely move despite big sell off in equities

Despite yesterday’s major sell-off in equities which momentarily took the S&P 500 cash index below 700 the long end of the US Treasury spectrum of maturities barely budged. This is evident in the chart above which tracks the yield on the longest maturity Treasury - the thirty year bond.

It has been estimated that the US alone has to issue about $2 trillion of Treasury securities this year and this should keep PIMCO et. al. somewhat less enamoured with the attractiveness of 30 year bonds with coupons with a 3 handle.

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