Interest Rates: How Low Can You Go?

How about this for a Chart of the Day?

With 10-year Treasury Note yields reaching an all-time low of 1.43% Friday, this is something that we have to put into perspective. The chart below shows US Interest rates going back 220 years, to at time when this country was just getting started. This is some chart.

(Click Chart to Embiggen)

It has almost a 100% correlation to the Federal Reserve's daily constant maturity series. Construction is explained at Bianco Research.

From WSJ:

With the 10-year yield below 1.5%, some traders said it is hard to predict how low the yield could fall, because in a sentiment-driven market, panic buying could push the yield down further.

"We are in uncharted territory" in terms of yields, said Kevin Walter, head of Treasury trading at BNP Paribas. "The 10-year yield could hit 1.4% very quickly if sentiment continues to worsen."

UBS analysts, who put out a call several weeks ago that Treasury yields are still too high, said their model shows a fair value of 1.2% for the 10-year yield, though they admitted that level "sounds too aggressive," and that "something in the 1.40% neighborhood [for the yield] makes sense to us."

Wow...

Sources:

What Is The All-Time Low 10-Year Yield? (Ritholtz)

US Jobs Data Send 10-Year Treasury Yield Below 1.5% (WSJ)

Tags: $TNX $ZN_F