A brief summary goes as follows: Long-term real and nominal rates and term premiums in the United States were very low as of early May, with the 10-year Treasury yield bottoming out at 1.63 percent at the beginning of the month, with an associated term premium estimated to be on the order of negative 0.80 percent.6 The 10-year TIPS yield reached negative 0.72 percent around the same time.7 However, following Chairman Bernanke’s May 22 testimony to the Joint Economic Committee and after our June 18–19 FOMC meeting, yields rose sharply, with the nominal and real 10-year rates reaching 2.61 percent and 0.60 percent, respectively, as of June 25.8 In the absence of a significant shift in policy fundamentals, a number of observers have highlighted the role of a variety of market dynamics in driving the observed changes in yields.
On behalf of the Central Bank of Kenya which is co-hosting this event with the Kenya Bankers Association, let me extend a very warm welcome to all credit providers represented here today. We look forward to an interactive evening of sharing our past successes and identifying the opportunities for a broader collaboration between various market players.