Recent Changes in Government Bond Yields

In part as a result of the COVID-19 pandemic and its many impacts on the world economy, US government bond yields have been steadily declining since mid-2019. Many factors have an effect on US government bond yields, including monetary policy, inflation, and the overall economic conditions, among other things. One element of the current economic climate that has had a significant impact on bond yields is the job market, more specifically, the steep increase in nationwide unemployment rates stemming from the COVID-19 pandemic and subsequent lockdowns. Recently, however, the job market outperformed economist expectations, with the Labor Department announcing a new low in unemployment rates since the beginning of the pandemic. Upon this announcement, US government bond yields began trending upward, breaking a five-week plummet. While economists are noting that this development does not signal a swift and complete recovery of the job market, they are optimistic that employment is trending in the right direction.

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- Anthony Winkels is Managing Partner and Wealth Advisor at Fortis Wealth Management