The US 10-year T-Bill has finally returned to 3% today, after years of offering returns between 1.5% and 2%. The 3% was hit about seven months after the #FED’s ending of its QE program last September. #ES and #IT yields have gone down over the last year. Both countries have benefitted from “Planet ECB’s” bond buying-scheme which created significant distortions in the market and so I am assuming that this must have been the main reason behind the drop in their yields. Contrary to the FED’s declared intention of further raising interest rates over the upcoming months, neither the #ECB nor the #BOJ have announced plans to deviate from their negative interest rate policies anytime soon. I do not believe the 3% yield on the US 10-year bond will have a major impact on the US equity markets, considering that the 3% yield is only about 0.5% higher than US inflation. Given the still very low yields in #EU and #JP however, it could entice more investors from these jurisdictions to invest in the #US even without hedging for currency risk.
*EDIT*
One day later, the #ECB announced that not only it does not intend on changing its monetary policy, but it does not see very likely to do so any time “well past” September 2018. This further enhances the last point in my original post.
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