Bonds at their lowest yield ever — or are they?

Today, press reports indicated that the benchmark 10-year Treasury bond yield has reached a record low of 1.896%. In reality, the yield on the 10-year Treasury may not have reached its lowest level ever. The record low actually came in 1945, when yields fell to 1.55%, according to Bespoke Investment Group LLC. Justin Walters, Bespoke's co-founder, said the data are from Global Financial Data. A spokesperson at Global Financial Data confirmed that the low on the 10-year was reached in 1945, but declined to provide more specifics. Older data are not always reliable, observers said. In the 1940s, trading in government bonds was more limited and yields were capped in some cases. Any debate about the record low is "really splitting hairs," Ward McCarthy, chief financial economist at Jeffries & Co. Inc., said in an interview late last month as rates also were reaching new lows. The current bond rally has "revisited the lowest [interest rate] levels since the Treasury market has become a fully developed and mature market," he said. Federal Reserve yield data, for example, go back only to 1953. But according to the authoritative "A History of Interest Rates," early 1946 was "the great crest of a 26-year bull bond market" that began in 1920, which until then was the greatest run ever for U.S. bonds. Rates then rose until 1981, when the current record 30-year bull market began. A long-term chart at multpl.com shows an annual average low of 1.95% coming in 1941, based on data in "A History of Interest Rates."