Though they employ the same word, the two phrases “return to normal” and “new normal” are diametrically opposed. If you’ve witnessed a live television commercial break in the last month, then you’re probably aware of society’s return to normal; while interest rates, on the other hand, are threatening a new normal as they fail to lift off 0%.
Making a New Normal
The 2YR yield currently rests around 0.15%, which is only 6 basis points higher than its all-time low of 0.09% made in February.* Since 2000, the 2YR has averaged 2.00%, but it’s spent more than 40% of this period below 1.00%.* Putting the magnifying glass on 2010 to present, 0% yields certainly seem more normal than those in higher positive territory.
2YR US Treasury Yield*
The notion of a new normal often alarms people, but the actual shift can happen without those same individuals even noticing. Low yields aren’t necessarily a reason for fear, but they do present a set of historically rare opportunities. *Values taken from treasury.gov as of 6/10/211 — © 2021 Small Exchange, Inc. All rights reserved. Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information in this advertisement is current as of the date noted, is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading futures involves the risk of loss, including the possibility of loss greater than your initial investment. Source: https://www.danielstrading.com/2021/06/18/are-0-rates-the-new-normal
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