ORANGE COUNTY, CA—Every year since 2011, CBRE SVP Philip D. Voorhees and his team gather clients and investors together to play a rousing game of Pin the Yield on the Treasury. The game asks professionals to estimate, or predict, what the 10-year Treasury yield will be at the close of December 31—for a grand prize of a $1,000 American Express gift card. Last year, the winner, Michael Gusich of Everest Holdings, came within .012% of the year-end number. To find out more about the annual competition and the importance of tracking the Treasury yield, we sat down with Voorhees for an exclusive interview. Here is what he tells us:

GlobeSt.com: What is the 10-Year Treasury yield?

Philip D. Voorhees: In addition to being a leading benchmark for commercial financing, the 10-Year Treasury yield, the “risk-free” rate for investment, reflects the global market's perception of risk. While the US economy seems to have turned the corner toward growth, implying short-term interest rates should rise, the Treasury yield remains very low in response to the lack of risk-appropriate investment yields elsewhere around the globe. Though, still not as low as in many other developed nations. 

GlobeSt.com: Tell us about your Pin the Yield on the Treasury™ contest.

Voorhees: In 2011, our team introduced the Pin the Yield on the Treasury™ contest. The idea was simple: We asked our clients and investors to make their best estimate at where the 10-Year Treasury yield would be by yearend. This is essentially a “closest to the pin” contest to predict where the 10-Year Treasury yield will close on Thursday, December 31, 2015. The results are compiled, charted and distributed to participants so that we can all benefit from the collective wisdom (or best-guessing) of this group. The winner receives a $1,000 American Express Gift Card. Last year's winner was Michael Gusich of Everest Holdings with an estimate of 2.158%. The actual 10-Year Treasury yield on December 31, 2014 was 2.170%.

GlobeSt.com: What do the predictions tell you/us?

Voorhees: The predictions seem to indicate the sentiment toward the state of the economy, but also can shed light on decisions investors will make as the year goes on. For instance, if investors think the Treasury yield (and other interest rates) will rise, they may move quickly to lock rates on a refinance or sell. If investors believe interest rates will fall, they may be inclined to postpone refinancing or sales.  

GlobeSt.com: What is your forecast for 10-Year Treasury yield at yearend 2015?

Voorhees: With all of the Pin the Yield on the Treasury™ estimates not due until Friday, April 3, I probably should refrain from making an estimate. Though, I could make a case that rates should move down – perhaps significantly – when compared with yields in Germany (.18%), Italy (1.20%), Spain (1.17%), Canada (1.30%) and other developed nations. However, a healthy, growing economy typically pushes rates higher. If I knew for certain, I would be trading bonds, not selling retail properties!

GlobeSt.com: What is driving US Treasury yields?

Voorhees: Demand drives yields pure and simple. When demand goes up, yield goes down, and vice-versa. It's economics 101. Presently, the strength of the US economy relative to that of other nations, political security/stability and the price and availability of fossil fuels all influence Treasury yields.

GlobeSt.com: Anything else that you want to add about the market and yields?

Voorhees: This is an amazing point in history. Rates are near historic lows, but relative to yields elsewhere, US Treasury yields could move lower. With the denominator (the current yield) so low for the 10-Year Treasury, small movements in yield have a big impact. For example, on February 2, 2015, the 10-Year Treasury yield was 1.67%. By March 6, 2015, it was 2.24%. That's a 34% increase in yield in just more than a month. That would be like the DOW moving from 18,000 to 24,000 in a month! Think of what the newspapers would read! These are remarkable times.