Bond yields at historic lows

Greek bonds rallied strongly on Tuesday, with yields for most of them, irrespective of duration, dropping to historic lows.

The yield of 10-year Treasury bond dropped for the first time below 1.9 percent, finally settling at 1.826 percent, 13 basis points or 7 percent lower than Monday. The 5-year bond also ended at an all-time low yield of 1.082 percent, a 7.8 percent drop, and the new 7-year bond ended at 1.56 percent.

The rally was sparked by the government sweeping away the final banking restrictions from the capital controls imposed in June 2015, when Greece stood on the precipice of a potentially catastrophic eurozone exit.

When issued in March, the 10-year bond was yielding 3.9 percent; the 5-year bond was issued in January with a 3.6 percent yield, and the 7-year bond, issued in July, was yielding 1.9 percent. Most of the drop in the yields has taken...