Treasury Yields Snapshot: August 11, 2023

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The yield on the 10-year note ended August 11, 2023, at 4.16%, the two-year note ended at 4.89%, and the 30-year at 4.24%.

Here is a table showing the yields’ highs and lows and the FFR since 2007.

The charts below show the daily performance of several Treasury bonds since the pre-recession days of the equity market peaks in 2007.

The next chart is an overlay of all 6 charts above along with the Fed funds rate (FFR) since 2007.

A Long-Term Look at the 10-Year Treasury Yield

A log-scale snapshot of the 10-year yield offers a more accurate view of the relative change over time. Here is a long look since 1965, starting well before the 1973 oil embargo that triggered the era of “stagflation” (economic stagnation with inflation).

Here’s the latest 10-2 spread. Typically, the spread goes negative for a period and then out of the red prior to recessions. The lead time for recessions is quite a range – after going negative, recessions have begun anywhere from 16 to 62 weeks later. We also can see a false positive in 1998 where the spread went negative for a short period. For the 2009 recession, the spread went negative a couple of different times before rising.

Using the first negative spread date as our starting point, the average number of weeks preceding a recession is 37. That’s about nine months. If we use the last positive spread date after being negative before a recession, the average is 17 weeks or 4.25 months and the median is 14 weeks or 3.5 months.

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The 30-Year Fixed Rate Mortgage

The latest Freddie Mac Weekly Primary Mortgage Market Survey put the 30-year fixed rate at 6.96%. Here is a long look back, courtesy of a FRED graph, of the 30-year fixed-rate mortgage average. Data begins in April of 1971.

Now let’s see the 10-year against the S&P 500 with some notes on Federal Reserve intervention. Fed policy has been a major influence on market behavior.

For a long-term view of weekly Treasury yields, also focusing on the 10-year, see our latest Treasury Yields in Perspective update.

ETFs associated with Treasuries include the iShares 20+ Year Treasury Bond ETF (TLT), the iShares 1-3 Year Treasury Bond ETF (SHY), and the iShares 7-10 Year Treasury Bond ETF (IEF).

Note: We’ve updated this commentary with data through the August 11 market close.

Originally published on ETFTrends.com on August 14, 2023.

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