Treasury yields, some of the most sensitive barometers of investor sentiment, keep dropping to new lows as a torrent of bad economic news continues.

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NEW YORK — Treasury yields, some of the most sensitive barometers of investor sentiment, keep dropping to new lows as a torrent of bad economic news continues.

But as investors send yields down, they’re also influencing the economy — driving interest rates so low that savers get punished and borrowers get a break.

On Wednesday, after data showed a shrinking service sector and slowing productivity, Treasury bill yields hovered near zero.

Meanwhile, the yield on the two-year note fell as low as 0.87 percent, the 10-year yield sank as low as 2.65 percent and the 30-year yield dropped as low as 3.16 percent.

These were the lowest yields for these Treasurys since the government started issuing them, and the lowest yields for assets equivalent to these Treasurys in more than 50 years, according to Global Financial Data in Los Angeles.

Treasury buying has picked up and sent yields down because the economy is in a recession, one that investors believe will be long and deep.

Yields are also falling because the Federal Reserve has cut its benchmark federal funds rate to 1 percent.

Investments and lending rates are tied to Treasury yields, so when they fall, people earn less on their savings but pay less on their loans.

According to iMoneyNet’s Money Fund Report, the average seven-day yield on a money fund fell to 1.04 percent in the week ended Dec. 2, down from 1.12 percent in the previous week and 1.88 percent three months ago.

Consumer borrowing rates have started to drop, too, albeit slowly. The average 30-year fixed-rate mortgage is at 5.92 percent, said, down from 5.97 percent the previous week and 6.55 percent three months ago.

“When the Fed adopts an easy-money policy, it does favor borrowers over savers,” said Gary Thayer, chief economist at Wachovia Securities. “Obviously, savers aren’t getting very good return on their money. But compared to other assets, it’s better than the losses that are being suffered elsewhere.”

Although money-market and day-to-day accounts are offering savers less, there are some incentives for individuals to put their money into certain interest-bearing accounts.

Banks are offering decent rates on certificates of deposit when compared with Treasurys and inflation, said Greg McBride, senior financial analyst at As demand has drained from the credit markets, deposits have become the surest and cheapest way for banks to get funding.

But in general, the government’s move to slash rates and commit hundreds of billions to saving mortgages and rescuing banks is aimed at spurring borrowing and lending again to boost the economy.

The worry, though, is that when the market’s fears abate, the government will be in a bind: Stimulating the economy by slashing rates and other actions for too long could risk another bubble of debt, but withdrawing the stimulus too quickly could hurl the economy back into recession.

The main reason behind the downturn is that people increasingly relied on credit over the past couple decades, using their rising home values as piggy banks and credit-card lines like bank accounts.

Total consumer credit, which doesn’t even include mortgages, jumped from about $700 million in 1988 to $1.4 trillion in 1998 to $2.6 trillion this year, according to Federal Reserve data.

And over that period of time, the average personal savings rate fell from about 8 percent in the late 1980s to 4 percent in the late 1990s to negative territory by 2005, according to the Bureau of Economic Analysis.

When the housing market started plunging, mortgage defaults spiked since people had no cushions to fall back on. Now, nearly all types of loans are seeing default rates rise.

“Consumers have borrowed and borrowed and borrowed,” said Jay Mueller, portfolio manager at Wells Fargo Advantage Funds. “If the problem has been too much borrowing by too many people who can’t pay it back, I’m not sure if more lending is going to solve things.”