U.S. Yields Near 2% Make Traders Wonder Where Animal Spirits Are
- America's economic potential is waning, Sumitomo Mitsui says
- Low yields don't automatically mean recession, BNP says
NEW YORK, NY - AUGUST 25: A trader is reflected in a market screen on the floor of the New York Stock Exchange (NYSE) on August 25, 2015 in New York City. Following a day of steep drops in global markets, the Dow Jones industrial average rallied early in the day only to fall over 200 points at the close.
Photographer: Spencer Platt/Getty ImagesTreasury benchmark yields that fell to 2 percent this month are raising concern the U.S. economy is losing momentum.
Yields tumbled as a 8 percent decline in the Standard & Poor’s 500 Index in January, crude oil at a 12-year low and falling inflation expectations sent money managers to the haven of government securities. While the U.S. is adding jobs, manufacturing is contracting. Investors are trimming forecasts for how much the Federal Reserve can raise interest rates.