Here’s Why Bond Yields Continue to Stay Depressed

BondsRuss Koesterich: Interest rates were supposed to be rising, right? Here are the factors behind the ongoing low yield environment.

This month added another bizarre chapter to the seemingly endless drop in bond yields. The nonfarm payroll report, generally considered the key economic statistic of the month, came in 100,000 above consensus. Bond yields should have soared on the news, since ordinarily investors would interpret it as a sign of a strengthening economy and sell bonds. Instead, the 30-year Treasury bond advanced, pushing yields down to record lows.

In the days following the report, bonds yields rose a bit, but they are still close to historic lows. For history buffs, the yield on the U.S. 10-year Treasury note, currently around 1.50%, is roughly one-tenth of the all-time peak reached in the early 1980s.

What gives? If the economy is getting better, why are yields still stuck near all-time lows? A combination of factors are contributing, including:

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