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Falling Bonds, Rising Yields

Posted By Barry Ritholtz On January 26, 2007 @ 10:00 am In Energy,Federal Reserve,Fixed Income/Interest Rates,Inflation | Comments Disabled

Bond prices in the US, Europe and Japan have been sliding since December. At 4.11%, European 10-year government bond yields are at the highest level since  7/6/06, while at 4.88%, US bond yields are at their highest level since 8/15/06.

Yieldupswing_2 [1]

Graphic courtesy of Michael Panzner

From the Fed’s perspective, while falling energy prices have acted as the equivalent of rate cuts, rising yields are moving to cancel those out.

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[1] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/yieldupswing_2.jpg

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