Treasury Yields Are Plunging So Quickly a Record Low Is in Sight

(Bloomberg) -- With U.S. yields plunging so rapidly, it’s not unthinkable that rates on 10-year Treasuries could sink to a record low within weeks, according to Seaport Global’s Tom di Galoma.

After ending July at 2.01%, the yield on those benchmark securities has fallen to 1.65% in just eight trading sessions. It was almost twice as high in October. The speed of this collapse means 1.318% -- the all-time low set three years ago -- is in jeopardy of being broken this month or in September, said di Galoma, the firm’s managing director of government trading and strategy.

The catalyst, he says, will be a continued fall in rates elsewhere in the world, along with a U.S. stock sell-off that prompts investors to scoop up even more Treasuries.

“The plunge in global rates, especially in Europe, is having a profound effect on U.S. interest rates,” he said in an interview on Monday. “At this point, we see most G-20 economies growing at a tepid pace and that worries us. We see U.S. 10-year rates collapsing toward 1%-1.25% if growth or inflation in the U.S. do not pick up soon.”

To contact the reporter on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net

To contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net, Nick Baker, Elizabeth Stanton

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