In March, the nominal 10-year Treasury rate was 0.87%, which was the first time ever the monthly average was below 1%. Also, this month’s rate was virtually half of last month’s rate, which was the previous all-time low.

The real 10-year Treasury rate, which is the nominal rate minus the rate of inflation, was -1.06%. This was the third consecutive month the real rate was negative. And, it was the lowest negative real rate since July 2012.

In March, the year-over-year change in the real rate was -133 basis points. The change was negative for the 15^th month in a row. This was the lowest level for the year-over-change since  December 2016. And, this was the lowest level for the change since July 2012.

A falling change in the real 10-year Treasury rate tends to be a positive signal for durable goods manufacturing. Declining changes in the real 10-year Treasury rate tend to lead growth in durable goods new orders and capital equipment consumption by a relatively long period of time – historically, between 12 and 24 months. The declining change in the 10-year Treasury rate is a good leading indicator of growth in housing permits, construction spending and consumer durable-goods spending as well.

However, businesses and consumers are tightening their spending due to the COVID-19 pandemic, which means the typical correlation of a lower 10-year Treasury and growth in the above metrics may not occur.