Impact of Term Premiums

Our focus here is on another driver of lower U.S. interest rates in 2019. Term premiums, the compensation investors need to hold longer-term debt, have unexpectedly fallen as well with the 10-1 year term premiums, as estimated by New York Fed economists, falling by 14 bps since May 1 to -43 bps. This is the lowest level since at least 1961.