10-year yield slumps to record lowJuly 16, 2012: 11:30 AM ET
Investors who are on the hunt for yield may want to avert their eyes from long-term Treasuries.
The yield on the 10-year note slid to a record low of 1.44% Monday morning, as ongoing signs of weak global growth kept the flight to safety alive and well. Investors tend to snap up Treasuries during times of uncertainty because they're backed by the U.S. government.
It's not exactly a new story that the global economic recovery has stalled. The most recent monthly jobs report showed a piddly 80,000 jobs were added in June. That's not instilling a lot of confidence.
Monday's weak retail sales numbers and comments out of China over the weekend that growth was slowing isn't helping.
Europe's most troubled nations continue to struggle with high borrowing costs. The permanent bailout fund seems to be put on hold until Germany's high court decides whether or not it's constitutional, which won't be before September. A lot can happen between now and then.
"It's pretty much the same kind of worries," said Kim Rupert, fixed income analyst at Action Economics. She added that all this uncertainty will dampen growth until there's some clarity on the fiscal outlook for the United States. And that's not likely until after the presidential election.
This week, investors will be keen to hear what Federal Reserve chief Ben Bernanke says about the potential for further economic stimulus, or QE3, when he presents his semi-annual monetary policy report on Capitol Hill.
"Bernanke is expected to be pretty dovish," said Rupert, though she said any hints about stimulus are doing more harm than good. She argued that the market needs to "heal itself." But until that happens, investors are likely to keep buying Treasuries and push their yields lower. Rupert thinks the 10-year yield could hit 1.25% before the year is up.
"We'll probably be in this morass for awhile," she said.