There has been some speculation that the recent bid into treasuries causing record low yields is the market front running QE3.
It’s not just treasury debt though where yield continues to fall. Investment grade corporate debt as well as five year interest rate swaps also continue to move to record lows as shown below.
As pointed out recently (The Status Of QE3) Treasury TIPS, investor sentiment and both government and corporate credit markets are signaling a low growth, deflationary economic cycle. Something not very supportive of growing corporate profits.