According to data compiled by the Federal Reserve Bank of New York, the 10-year term premium moved above zero for the first time in 10 months on the 14th of November, less than a week after Mr. Trump’s surprise Electoral College win. This means investors were quickly being forced to pay significantly more for a risk-free Treasury note than would at the time have been expected given prevailing expectations on both inflation and real interest rates – all within days of the election. On the last day of trading for the year, the yield on the benchmark Treasury note stood at 2.42% – 1.05 percentage points higher than July’s yield of 1.366%, an all-time record posted in the wake of the Brexit vote. Most of these gains are likely attributable to surging risk premia.
Surging yields over such a short period of time are rare in the bond world. The biggest
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