Posted on Jan 6, 2021, 10:40 a.m.Updated Jan 6, 2021 11:17 AM
It’s more than a symbol. As a Democratic victory looms in Georgia’s senatorial elections, the rate on 10-year Treasuries – US government bonds – climbed 6 basis points to cross the 1% threshold. A level he had not known since last March. At the time, the shock of Covid-19 on the world economy had pushed investors to rush to safe-haven securities, and first and foremost American sovereign debt. The price of US bonds then climbed. And when the price goes up, the yield goes down.
The 10-year yield of the United States then fell below 1% for the first time in its history, even reaching a low of 0.314% in March. On the markets, some even envisaged seeing it go down to 0%, or even go down into negative territory, as in most European states. But since then, it has continued to rise, driven in particular by the hope of an economic recovery thanks to the vaccine against the coronavirus. The hypothesis of a blue wave – a total victory for the Democrats in the presidency and in Congress by November – also fueled the rise in US rates.