US Treasury: Financial crash parallelism

The partial recovery of Treasury market yields in the week to last Friday was short-circuited by the Federal Reserve rate cut and restart of quantitative easing but it has parallels from the early months of the financial crisis a decade ago, Joseph Trevisani from FXStreet briefs.

Key quotes

“The 10-year Treasury which closed on Friday at 0.946% was returning 0.734%. The 5-year was at 0.494% after closing at 0.702% and the 2-year was at 0.356% following a 0.516% finish on Friday.” 

“The Dow dropped about 55% from October 2007 to March 2009 and 37% in the most acute phase from August to November 2008.  The Dow is currently off about 28% from its high of February 12.”

“The extent and severity of the economic damage from this event, like 12 years ago is unknown. But the Treasury yield collapse and recovery hints that the credit market response may be close to running its course.”