The yield on 30-Year Treasuries has now fallen below 3%, the lowest pay-out since the security was created in 1977. Either the Fed is actively buying the bonds to push long-term yields lower or this is simply a massive short-covering rally.

There is one other explanation, however, and that is perhaps we are entering a Japanese-style deflationary cycle that could take the yield under 1%. While I think this is the least likely of the three, I can’t bring myself to rule it out completely.

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