The Bloomberg US Treasury Index rose 0.2% on Monday and is now back about where it ended 2022.Ī negative term premium is a sign that that the economic outlook is deteriorating, according to George Goncalves, head of US macro strategy at MUFG. That shift, accompanied by a broad rally in Treasuries, points to expectations of a 2024 recession forcing the Fed to cut interest rates, while downplaying the previous focus on surging debt issuance overwhelming demand. As recently as September, it was climbing above zero for the first time in more than two years as investors sent US yields to the highest in more than a decade after the Biden administration boosted bond sales and wrangled with lawmakers over the debt ceiling.īut in a reversal, the term premium has now dropped back below zero with the gauge for 10-year notes slipping to minus 1.7 basis points Friday, from a high of 48 basis points in late October, according to the New York Fed.
