Interest Rates May Be Peaking

On Wendesday, the par yields for U.S. Treasury securities produced lower par yields for the second day in a row:

Table 1

Source: U.S. Treasury

Together with the strong performance of the 5-year note in today's auction, this two-day streak of declining market yields, albeit modest, could indicate that U.S. debt yields are near their peak. 

The sharp rise in interest rates on U.S. debt have not come unaccompanied. European interest rates have also risen since the beginning of the year. This, however, is not driven by domestic central-bank action. Figures 1-3 report par yields on a selection of euro-denominated sovereign-debt securities; the reported maturities are equal to those of the U.S. Treasury.

The securities are weighted averages for the euro zone. All data in Figures 1-3 is courtesy of the European Central Bank via Eurostat.

Figure 1 reports bill yields:

Figure 2 reports notes:

Figure 3 reports bonds:

Figure 4 compares the yield on the 10-year security from the U.S. Treasury with the numbers reported for the similarly maturing, euro-denominated weighted average: 

The ECB has been weaker than the Federal Reserve in executing a monetary tightening. However, it is expected to raise its lead interest rate by another 0.75 percent at tomorrow's policy meeting. 

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We do not give investment advice. 

This blog provides analytical information solely for the purposes of 1) predicting the cost of the federal debt, and 2) for assessing the risk for a U.S. fiscal crisis. All information published here, forecasting and other, is based on publicly available data from the U.S. Treasury, including but not limited to approximately 65 percent of the current debt; on macroeconomic data, including but not limited to monetary policy decisions by the Federal Reserve; and on macroeconomic theory.