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Yields across the US fixed-income and equity landscape continued to compress on Monday, with the 10-year Treasury note trading around 4.35%, its lowest level since early May. Bank of America data show the gap between the highest and lowest yields among five major US asset classes has narrowed to less than one percentage point for the first time on record. The current range runs from 5.19% on the bank’s US Corporate Bond Index to 4.32% on three-month Treasury bills, with the S&P 500’s earnings yield at 4.72% and the 30-year Treasury at 4.90%. Investor demand for short-dated government debt remained solid at Monday’s auctions. The Treasury sold three-month bills at a high yield of 4.195%, down from 4.240% at the previous sale, drawing a bid-to-cover ratio of 3.49. Six-month bills cleared at 4.120% versus 4.155% previously, with a 2.70 bid-to-cover. The lower auction yields and record-low cross-asset spread highlight persistent expectations that the Federal Reserve will maintain—or possibly ease—current policy rates amid cooling inflation and steady demand for safe assets.
