Investment History Made - How Long Will It Hold?

History was made on August 14, 2019, with the recording of the lowest closing yield (2.02%), on the 30-year U.S. Treasury since regular auctions began in 1977. The previous lowest closing yield (2.099%) was recorded on July 8, 2016.

It may be hard to remember what was going on in the summer of 2016, as a reminder:

  • Fallout from the June 23, 2016 vote for the United Kingdom to exit the European Union (51.9% of votes being in favor of leaving).
  • July 2016 was characterized by a failed coup in Turkey, a string of senseless acts of violence in Europe, escalation of racial strife domestically, and two contentious U.S. Presidential conventions.
  • Oil prices slid 13% to $41.60 to finish July, on high inventory levels of gasoline and crude.
  • U.S. employers added nearly 300,000 new employees in June.
  • The Fed declined to raise interest rates, but stated, “Near term risks to the economic outlook have diminished.”
  • The S&P 500 marched on to a new all-time high on the strength of unexpectedly solid employment and consumer spending numbers – at this point marking the second longest sustained bull market run in U.S. history. The run began March 9, 2009 without experiencing a drop of 20 percent or more from a closing high. The previous longest bull market run went from December 4, 1987 through March 24, 2000, a run of 4,494 days.
  • The strength of the equities market went beyond the U.S., as markets around the world were undeterred by geo-political discord. Concerns grew that investors may be growing impervious to turmoil. Instead, market fundamentals, economic optimism, and historically low interest rates continued to fuel the performance of the stock market. Even the United Kingdom (as measured by the FTSE 100 Index) rebounded strongly from the steep sell-off it experienced after the Brexit vote.
  • Real GDP increased at an annual rate of 1.2% in the second quarter of 2016. The first quarter GDP was revised down from 1.1%. to 0.8%.
  • Globally, government bond rates hit historically low levels with over $10 trillion trading at negative yields in Japan and Europe.

To read the full whitepaper please click here.