What makes the US Treasury Bill yield so high?

The US 10-year government bond has risen to a historically high point above 3%, this increase is fulfilled by the investors’ expectations about the possible rate hikes by the US Federal Reserve. When the US Federal Reserve decides to increase its rates, bond yields including corporate bond yields as well as the US Treasury Bill yield will increase in general. The rise of bond yield indicates the fall in its price as the lenders give out more interests with the same amounts of loans.

The sharp rise in the stock market last year partially contributed to the high Treasury Bill yield, as when the stock market is so attractive, in order to make investors invest in Treasury Bills, the yield has to be high enough to make Treasury Bills attractive. Moreover, the political tensions have weakened, especially when North Korea shows its willingness to be back to the negotiation table with other countries (by the time, the Far East was believed to the place where it was the most likely to have a war).

When there is no intervention from the central bank, the stock prices and the bond prices move in the opposite directions. However, when the central bank intervenes and raises the base rates, the stock prices will fall, and the bond yields will soar (in other words, the bond prices will fall), so the stock prices and the bond prices move in the same direction. After the central bank intervention, the stock prices and the bond prices will then move apart.