Negative 10y UST term premiums today are akin to AAA-rated subprime MBS circa 2005 (FFTT, 3/5/24)
Common sense holds that investors should get paid more for taking more risk. This tends to be true in the bond market: The further you extend the maturity of bonds you hold, the more uncertainty you are underwriting and the more you should get compensated… Currently, the U.S. bond market doesn’t follow this logic. The yield curve is inverted, with cash yielding more than longer-dated bonds. The odds are that this trend will not continue.