FATT - 10-year Treasury yield continues plunge as analysts reassess forecasts

LPETTET/iStock via Getty Images A prolonged drop in U.S. Treasury yields is catching bond and fixed income traders by surprise, as well as other investors in the broader financial markets. The 10-year U.S. Treasury yield dropped below 1.3% on Wednesday, and fell another 6 bps overnight to 1.26%, despite lingering concerns about rising inflation and a gradual removal of Fed stimulus. Treasury yields play an important role in the economy, affecting borrowing costs on everything from mortgages to corporate bonds. What's happening? While the move has mystified many traders, some are ascribing the reverse to changing narratives and new developments. "The market is sort of taking a deep breath," said Subadra Rajappa, head of U.S. rates strategy at Société Générale. "Are those optimistic forecasts [for economic growth and inflation] actually achievable?" "All that seems to be implying that perhaps not only was the inflation transitory, but maybe some of the growth

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10-year Treasury yield continues plunge as analysts reassess forecasts