Negative Bond Yield in Europe Caused U.S. 10-Year Treasury Yield to Hit Record Low
NEW YORK (TheStreet) -- The U.S. 10-year Treasury note yield fell to 1.36%, the lowest level seen since 1953. In the past decade, if the yield made a major decline the markets did not respond well, CNBC's Tyler Mathison said on "Power Lunch" Tuesday afternoon.
The only major sector that has traded positively 56% of the time during a decline in the 10-year yield is the Utilities Select Sector SPDRETF (XLU) - Get Report . The financial sector traded the worst as Goldman Sachs and J.P. Morgan submitted average losses of more than 7% during a decline, Mathison said.
Investors around the world are afraid to put their money in Europe right now because of negative yields meaning they would lose money to buy bonds in European countries, Managing Director of FBR Capital Paul Miller told CNBC.
The U.S.'s low rate of 1.4% looks very appealing to those investors which is why the yield is down and investors come flocking to the U.S., Miller said.
If the 10-year continues to stay down, you will see earnings revisions as it is difficult to make money in a low flat rate yield curve environment, he explained.