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why has the 10-year treasury bond rate fallen ? As of 12/31/19 it was 1.92, and...

why has the 10-year treasury bond rate fallen ? As of 12/31/19 it was 1.92, and today it is around 0.81. Explain?

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Expert Solution

The yield of treasury Bond rate has fallen because the interest rates in the economy has drastically fallen as it can be seen that the interest rates has been almost In the zone of hitting 0, because it has been expected that the market is going to go through a recession and there has been a significant inversion of yield curve.

we should always know that Bond prices and Bond yields are inversely related so when Bond prices are going up during the times of recession, there will be a more significant inclination of individuals to invest into the bonds in order to protect their capital and the bond prices are going to go up but the bond yields are going to come down in order to adjust for Bond prices which are going up so it is also reflecting the level of interest rates in the economy which is also moving down so it is reflecting that the bond yield are down due to Bond prices going up and the the expectation of an impending recession which is leading to fall in the bond yields.

jeff jeffy answered 2 years ago
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