Bond yields tend to tank when everyone is moving into bonds (often Muni bonds) when the stock market or world conditions are volatile and unpredictable like the last 6 months or so. The drive towards bonds is often safer as long as those bonds are insured. Because with cities going bankrupt if your Muni bonds aren't insured with Treasuries or some other useful form of insurance you could lose not only your interest but also your principal.  However, if you live in the same state as your Muni bonds you pay no taxes on any interest you receive either state or federal. So, this also needs to be calculated because not paying ANY taxes on your interest because you are being patriotic investing in your municipalities in your state is quite a draw for people to invest under some circumstances.

For example, during the Great Depression the most stable investment was then Municipal Bonds. However, because cities now sometimes go bankrupt and potentially might not pay up their debts, unless your bonds in that city are insured you might lose your investment and your interest in these times.

 

Why bond yields are tanking

Yahoo Finance (blog)

- ‎17 hours ago‎

Follow Yahoo Finance Fri, May 30, 2014, 2:24 AM EDT - U.S. Markets open in 7 hrs 6 mins Recent % | $ Quotes you view appear here for quick access. Finance Home My Portfolio Market Data Business & Finance Personal Finance Yahoo Originals Breakout The Daily Ticker Driven The Exchange Hot Stock Minute Just Explain It Unexpected Returns CNBC Why bond yields are tanking By Deirdre Hughes May 28, 2014 6:39 PM Daily Ticker The yield on the 10-year Treasury note (^TNX) hit a new low for the year, sinking as low as 2.43% Wednesday, its lowest level since June 2013. In a phenomenon that has surprised many on Wall Street this year, money is rushing into Treasurys even as stocks hover near multi-year or all-time highs. Yahoo Finance Senior Columnist Michael Santoli says the flood of money into bonds is a global phenomenon and that as low as yields have fallen in the United States, they’re still better than much of the world. “If I want to give you a list of the countries whose 10-year debt trades at lower yields than the United States, it’s almost all the developed world,” said Santoli, highlighting that the United Kingdom, Canada and Germany are among the countries with lower yields than U.S. debt right now. “Globally, there’s a scarcity of yield.” Investors “caught unawares” “The reason that I think you’ve had this persistent rally is so many people were caught kind of unawares or wrong-footed” with a lot of institutional money betting against bonds, according to Santoli. “Pension managers had a 30% up year in stocks last year. They’re fully-funded and - guess what – they now have to rotate out of stocks into bonds… to lock in longer-term yields.” That rotation has created consistent demand for the longer-term safety of bonds. Despite the rally, some big investors have yet to change their outlook for Treasuries. “Coming into this week, hedge funds were still net short the 10-year note in the futures markets on an aggregate basis, so they haven’t yet quite capitulated and so to me, that’s the story.” Economy going off the rails? Yahoo Finance Editor-in-Chief Aaron Task says some market watchers are reading the rally in the bond market as a sign the economy is about to take a turn for the worse. “Some people are painting a picture to say: Well, the bond market is telling you that the economy is going off the rails and that it wasn’t about the weather in the first quarter.” But Santoli doesn’t ascribe to that view. “I don’t think it’s going off the rails. I do think the bond market’s saying they don’t see a great risk of rapid acceleration in the economy,” he said. “So, if you believe that that’s priced into stock earnings forecasts right now, that could be a problem for stocks if in fact the bond market is right about that.” Santoli doesn’t think the bond market is right about that. “I think slow and steady growth is pretty much a warm bath for stock prices as well, so that’s why they’ve been managing to hold up at these levels. View Comments (129)

Yahoo Finance Senior Columnist Michael Santoli says the flood of money into bonds is a global phenomenon and that as low as yields have fallen in the United States, they're still better than much of the world.

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Why bond yields are tanking

If I were to take a guess at what is happening in developed countries around the world we might be heading either for a bigger war or wars (non-nuclear and likely more economic wars than real ones) with more sanctions by big developed nations upon smaller ones. For example, China might sanction Viet Nam and Japan and the Philippines or have trade wars with them or just sink more of their ships over disagreements.

The other or simultaneous event or events might be something like a worldwide great depression or just various forms of different kinds of chaos worldwide.

However, the driving force really behind all this can be attributed mainly to global climate change and global warming so turning food growing worldwide into an unpredictable chaos that nations are struggling to feed their people worldwide and to prevent their peoples from collapsing their governments. So, this is the real cause behind these changes worldwide. 

Also, the only game in town appears to be the U.S. so people are investing in U.S. bonds as a hedge against the chaos of various kinds where they live which is driving down bond yields. What happens next specifically I have no clue. I'm just aware of the tendencies at this point.

So, as the U.S. finally recovers from the Great Recession the whole world outside of the U.S. finds itself in a Great Recession and the hope is they can recover rather than taking the U.S. also down into a global Great Depression along with them.

The most efficient nations at developing alternative energy likely will do the best coupled with keeping their air and water clean enough to keep people alive during these times. And countries growing more organic food (but not GMO) will also do the best because quality of life will remain high.