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Down, Down, Down: 10 Year Yields in Advanced Countries

Summary:
Perusing the last issue of the Economist, I noted that among advanced economies, only Greece (180 bps), Spain (87 bps), Australia (133 bps), South Korea (112 bps) and Chile (108 bps) had larger declines in the ten year yields than the US (81 bps). Of these, one could argue Greece and Spain declines were attributable to a decline in default risk, leaving only Australia, South Korea and Chile. Figure 1 below illustrates what has happened to 10yr-3mo, 10yr-2yr and 5yr-3mo spreads over the past year (indicated by vertical green line)

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Perusing the last issue of the Economist, I noted that among advanced economies, only Greece (180 bps), Spain (87 bps), Australia (133 bps), South Korea (112 bps) and Chile (108 bps) had larger declines in the ten year yields than the US (81 bps).

Down, Down, Down: 10 Year Yields in Advanced Countries

Of these, one could argue Greece and Spain declines were attributable to a decline in default risk, leaving only Australia, South Korea and Chile.

Figure 1 below illustrates what has happened to 10yr-3mo, 10yr-2yr and 5yr-3mo spreads over the past year (indicated by vertical green line)

Down, Down, Down: 10 Year Yields in Advanced Countries

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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