The bond market has entered a financial twilight zone, and at this point, there doesn’t seem to be a smooth way out.
could revisit the low of 1.32% it hit in July, 2016, after the U.K. voted to leave the European Union. Some strategists expect to see the 10-year at a new record of 1.25% by year end.
Analysts say the sharply lower U.S. Treasury yields could snap back if the trade war between China and the U.S. is resolved. Mikkelsen said there are other scenarios besides trade, that could bring about a reversal in the move that has driven foreign investors into U.S. corporate bonds, as well as Treasurys. "Maybe central banks are successful, and they create inflation. That's kind of what they're trying to do," he said.
Schumacher said a reversal in yields could ultimately be more broadly positive for the economy and financial markets.
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