One Number to Gauge Where the Economy Is Headed
The New York Times, 8.11.21 – There are many ways to assess the prospects for economic growth — from the performance of the stock market, to the latest unemployment data, to inflation. But when none of those send a clear signal about the state of the economy, there’s one reading that investors, traders and economists often rely on: The yield on the 10-year Treasury note.
On Wall Street, the yield on this heavily traded United States government bond — often called the T-note — is a closely watched gauge of sentiment in financial markets. Generally speaking, when yields on the T-note rise, it means expectations for economic growth and inflation are rising.
That’s because when investors are bullish, they sell bonds — which are generally deemed safe investments — and buy stocks, which are riskier. That pushes bond prices down and yields up. Conversely, yields fall when investors grow concerned about the economy because they buy more bonds, which pushes up their price. So bond yields provide a shortcut to the thinking of investors.
Early this month, the yield on the T-note fell below 1.20 percent, reaching as low as 1.13 percent, the lowest since early February. It has slowly crept up to about 1.35 percent since then.
View the article here.
