Yield on the benchmark U.S. 10-year government bonds fell to its lowest level in history in the aftermath of the Brexit vote this week. According to Mohamed El-Erian, there are three things investors need to know about the unprecedented low-yield environment.

3 Little Things

1. Falling U.S. yields reflect more about the economies in Europe and Japan than they do about the U.S. economy.
“Traditionally, lower yields and a flatter yield curve in the U.S. are strong signals of an approaching recession – and in this particular case, they would be signaling a painful downturn, given how far yields have dropped and how flat the curve has become,” El Erian wrote. Instead, the huge demand for U.S. Treasurys is simply coming from bond investors around the world looking to escape negative rates in Europe and elsewhere.

2. Low yields will not be much of a boost for the economy.
They will likely put…

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