This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How Low Bond Yields Hurt Consumers, Savers Paying for 'Debt Bubble'


NEW YORK (TheStreet) -- Treasury bond yields plummeting to levels not seen since 2012 are prompting some analysts to declare bonds are in a bubble. I disagree!

Throughout the financial crisis and during its recovery, global debt increased dramatically in what I call a "debt bubble."

On July 5, 2012, as the yield on the 30-year bond was approaching its record low at 2.45% I wrote, "U.S. Treasury Yields Are Not in a Bubble" Then on July 18 I wrote, "Low Yields Don't Make a Bond Bubble" and the record low yield followed on July 26.

Take a look at the graph shown in the July 18, 2012, post as its shows a bond bubble occurred in the early-1980's when we had double-digit yields. Yields can rise indefinitely but can never go below zero percent.

A major reason for the 2014 bond market rally is that U.S. yields are above other countries' yields. For example, the Treasury 10-year yield closed Thursday at 2.34% with the German 10-year yield at 0.87%.

My focus today is the yield on the U.S. 30-year bond which traded as low as 3.06% on Thursday.

Let's look at the daily graph of the yield on the 30-year Treasury bond.

Courtesy of MetaStock Xenith

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
TLT $120.74 -0.34%
AAPL $122.99 -0.32%
FB $96.99 1.78%
GOOG $631.93 0.63%
TSLA $263.82 -0.38%


Chart of I:DJI
DOW 17,751.39 +121.12 0.69%
S&P 500 2,108.57 +15.32 0.73%
NASDAQ 5,111.7330 +22.5270 0.44%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs