Monday, September 9, 2013

Watching the Treasury Yield

The benchmark ten-year U.S. Treasury bond crossed an important milestone last week, when its yield climbed above 3 percent for the first time since July 2011. The rate had been higher than 3 percent for decades before falling under that level, bottoming out at 1.4 percent in July 2012. As recently as May 1, it was at 1.6 percent.

This could be seen as another sign that our economy is returning to some semblance of normal. In addition to being the flagship safe-haven vehicle for investors around the world, the Treasury yield is used as a benchmark for things like corporate loans and mortgage rates.

But the milestone was short-lived. After investors were unimpressed by Friday morning's jobs report, the Treasury yield crept back down below 3 percent, finishing the day at 2.94 percent.

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