From Moodys:
The world is now incapable of shouldering a 10-year Treasury yield above 3%. A remedial decline by the U.S.’ benchmark interest rates will be critical to rejuvenating global business activity and stabilizing financial markets. Otherwise, the corporate earnings outlook might deteriorate by enough to sink the market value of U.S. common stock by another 20% and swell the now 552 basis point high yield bond spread to 800 bp.
Regardless of forthcoming increases in outstanding U.S. Treasury debt, recent Fed rate hikes, as well as the Fed’s intention to passively inject annually as much as $360 billion of Treasury bonds and $240 billion of agency MBS debt into the publicly-traded bond market, the 10-year Treasury yield plunged from a November 8, 2018 high of 3.24% to a recent 2.57%. An unfolding slowdown by global business activity now more than offsets the upward pressure put on interest rates by the Fed’s unprecedented firming of monetary policy on two fronts and a federal deficit inspired acceleration of U.S. Treasury debt relative to GDP.