This article originally appeared on RealMoney.com on Sept. 3, 2014 at 5:00 p.m. To read more content like this AND see inside Jim Cramer's multi-million dollar portfolio for FREE... Click Here NOW.
For the first time in history, the yield on the 30-year U.S. Treasury bond has fallen below the real GDP growth rate. The closest these two have ever come in the past was October 1998 when the spread was down to only 0.09%. The median spread, going back to 1977 (earliest data available), has historically been 3.63% with the average 4.26%.
So what's going on here?
In a QE-flush world Treasury yields correlate more closely with rates across the pond in the primary eurozone economies than with domestic economic trends. U.S. Treasury yields, and all rates that flow from them, are the lucky beneficiaries of the economic malaise throughout Europe (July's retail sales volume fell 0.4% vs. expectations of flat), proof that silver linings do sometimes occur, particularly these days for borrowers. A great deal of attention will be paid to the ECB's comments on Thursday, with mounting pressure to announce something that will inject some serious caffeine into an economy that is looking more and more like Charlie Sheen around 10 a.m ... on any day, let alone any given Sunday. This could be an enormous boon to those at the Fed, as the removal of one central bank from the sovereign bond trough may elegantly coincide with the arrival of yet another. Even Japan is sampling the sovereign delicacies, slurping up nearly $37 billion in Treasuries in the past six months.