Treasury Term Premium Increases to 2-Year High: Chart of the Day
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A valuation model measuring the extra yield investors demand for holding 10-year Treasuries climbed to the highest level in two years after the June employment report suggested the need for Federal Reserve stimulus is easing.
The CHART OF THE DAY shows the term premium rose on July 5 to 0.46 percent, the highest since July 2011, according to a Columbia Management Investment Advisers LLC model. The gauge rose after a Labor Department Report that day showed the U.S. added 195,000 jobs in June, compared with the median forecast of 165,000 in a Bloomberg News survey. The five-year average on the term premium is 0.21 percent. It reached an all-time low of minus 0.64 percent in July 2012.