Bond yields are going extinct!

MON, JUN 24, 2019

YOUR AFTERNOON NEWS UPDATE AND MARKET ACTION FROM CNBC

AS OF MON, JUN 24, 2019 • 12:12 ET

DJIA		26761.82
		+0.16%	+42.69

S&P 500		2951.42
		+0.03%	+0.96

NASDAQ		8028.39
		-0.04%	-3.32

EDITOR'S NOTE

Hello!!

The Wall Street Journal today has this insanely great chart of global bond yields I just have to share (see below).

We've talked a lot about how Germany's 10-year government bond yield is now deeply negative (around -0.3%). But did you know its 15-year is too? And the 30-year is getting close, at roughly 0.25%...

It's not just "safe-haven" Germany, though. Further down the list are far less usual suspects, like Slovenia (negative yields out to eight years), Slovakia (negative yields out to six years), and Malta (negative yields out to five years). Malta!!!

There are multiple cascading reasons for why this is happening right now (a lollapalooza effect, in other words): slowdown fears, falling inflation, a huge supply/demand imbalance, oh--and the fact that owning bonds has been pretty lucrative lately, those "yields" notwithstanding.

You're up about 10% this year owning 10-year Treasuries, for instance, as Paul Hickey of Bespoke pointed out on Squawk this morning. Or, there's my favorite observation of late, from BlackRock's Rick Rieder on Halftime last week: In Europe, he quipped, people "own bonds for the upside, and equities for the carry."

So far back here, stocks are offering some decent upside of their own. The S&P 500 is off to its best first half since 1997, up 18% since January. The Dow is up about 8% this month, putting us less than 200 points, as of this writing, from it clearing its prior intraday high of 26,951 from October.

Is owning stocks as attractive if interest rates move back up substantially from here? That's a discussion I'd love to be able to have. In the meantime, I worry a little about what Larry Lindsey cautioned about on the show last week: that too-low rates for too long will harm more than help the U.S. economy.

See you at 1 p.m!

Kelly

Kelly Evans

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