why has the 10-year treasury bond rate fallen ? As of 12/31/19 it was 1.92, and today it is around 0.81. Explain?
The treasury bond rate has fallen from 1.92 to 0.81 owing to the
fact that the demand for T-bonds have increased.
An increase in the demand for treasury bonds lead to an increase in
the price of the bonds. The increase in price, therefore, causes
the bond rate to fall, which decreases the yield of the bond as
well. The bond yield and the price of the bonds have an inverse
relationship whereby the bonds are more attractive when the prices
are low. Lower price will indicate a higher yield as the demand has
fallen.
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