Are Record Low Yields A Good Thing?

ByBrenda B Taylor

Recently students who are studying a Master of Finance degree have been discussing the record low yields on U.S. government treasuries. Currently the 2-Year is trading at a yield of 0.25%. To provide some insight, at the height of the financial crisis in September 2008, when Lehman Brothers filed for bankruptcy, the yield was 2.08%. Even when the stock market reached bottom in March 2009, yields were at 0.93%.

During the discussions, the students claims there are a number of reasons for the current low yields in Treasury Bills.

1) Flight to safety

The main reason that we are currently seeing record low yields is based on the fact that there has been a massive "flight to safety" by investors across the globe. Since stock markets started to rise in 2009, many investors still question whether we have seen and are still seeing a rebounding economy. With relatively little improvement in the unemployment rate, vast numbers of previously employed people now not even being counted as unemployed, and little willingness from companies to invest, there is a belief that there are too many dangers to the global economy for companies and individuals to invest in riskier assets.

2) Quantitative Easing

The Quantitative Easing programs undertaken by a number of central banks across the globe have had a range of impacts across the various economies. A number of supposed reasons for the programs have ranged from the honorable to the questionable. It has been claimed that the programs have kept interest rates low as the yield on government debt remains at historical lows and low interest rates may encourage companies to invest for the future. The fact that low yields on government debt enables those very governments to continue funding large current account deficits is supposedly meant to be just a coincidence. We will leave it to the reader to decide.

3) Government desires investors to invest in riskier assets

Lastly, low interest rates on government debt may hopefully push investors to invest in higher yielding securities such as stocks, which would again benefit companies who are looking to expand and take on more staff.

These facets of the economy are currently being studied by students in accounting and finance in various universities across the world.

Would You Like To Study a Master's in Finance?

A Master of Finance degree is a rewarding qualification where individuals who attain the level often gain a place in large financial institutions. Governments often rely on large financial institutions to provide analysis on the economy and the institutions have a large amount of lobbying power over the government. If you achieved a job with one of these financial companies, you could be responsible for molding the environment for economic growth in the future. If you would be interested in working for a large financial company you should consider completing an online Master's in Finance degree. By studying a Master's in Finance you would be equipped with the knowledge to join the financial elite and make decisions that would shape the future economy.

Brenda Taylor is a freelance education writer who has worked with a number of education companies. Find out more about studying a Master's in Finance degree.

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Brenda B Taylor

Email Address:SubscribeEconomics Article FeedFind More ArticlesSearchSimilar ArticlesPersonal Finance Online Or Personal Finance In Excel?Top Online Masters in Finance ProgramsMasters Finance Degree - Giving Postgraduates a Competitive Real World EdgeMaster Personal Finance BasicsCorporate Financing - Educational Training Program OptionsWhat Can You Do With an Online Finance Degree?Financing a Franchise in CanadaOnline Masters in Education - Read More About ItOnline Masters Degrees in Business Can Give You An EdgeCorporate Financing Career Education OptionsRecent ArticlesHow To Solve The Homeless SituationProgressivism Isn't Progress, VIIIHow Secure Is Your "Secure" Job?A True Comparison Of Increasing Debt Between Bush And Obama AdministrationsHow To Compete With ChinaWould Einstein Think Us Insane?What Will Happen If Greece Defaults?A Cluster of (Minor) ErrorsThe US Recovery Is Producing SurprisesA Sigh Of Relief For The Economic Status Of The USSubmitted On December 07, 2011. Viewed 7 times. Word count: 511.

MLA Style Citation:
Taylor, Brenda B.".".7 Dec. 2011EzineArticles.com.26 Jan. 2012 .APA Style Citation:
Taylor, B. B. (2011, December 7). . Retrieved January 26, 2012, from http://ezinearticles.com/?Are-­Record-­Low-­Yields-­A-­Good-­Thing?&id=6741066Chicago Style Citation:
Taylor, Brenda B. "." EzineArticles.com. http://ezinearticles.com/?Are-­Record-­Low-­Yields-­A-­Good-­Thing?&id=6741066EzineArticles.com© 2012 EzineArticles.com
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