How low can US bond yields fall?

Negative yields unlikely

US government bond yields are expected to fall further in the coming months but unlikely to follow in Europe and Japan’s footsteps and reach, or fall below, zero, according to commentators.

Last Wednesday (14 August) the US two-year and 10-year yield curves inverted for the first time since 2008, with the 30-year treasury yield falling below the 2% level for the first time ever the following day. The 10-year peaked at 3.25% in November 2018, when markets were still predicting interest rate rises from the US Federal Reserve. Nine months later, that yield stands at just 1.55%. There are three key factors behind the sharp fall in yields. First, the Fed's dovish pivot late in 2018, resulting in July's 25 basis point (bp) rate cut, the first since 2008. Second, heightened ...