This Day On The Street
Continue to site
ADVERTISEMENT
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."

Read More: Warren Buffett's Top 10 Dividend Stocks

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.

Read More: 10 Stocks George Soros Is Buying

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

Read More: 7 Stocks Warren Buffett Is Selling in 2014

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
Submit an article to us!
SYM TRADE IT LAST %CHG
TLT $124.00 0.00%
AAPL $128.95 0.00%
FB $78.99 0.00%
GOOG $537.90 0.00%
TSLA $226.03 0.00%

Markets

DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs