A financial model created by economists at the Federal Reserve that includes expectations for interest rates, growth and inflation shows 10-year U.S. Treasury notes are the most overvalued ever, Bloomberg reported.

As Treasuries hover near record low yields amid stagnant U.S. employment and lingering European debt concern, the so-called term premium, which Fed Chairman Ben Bernanke cited in a 2006 speech in New York as a useful guide in setting monetary policy, fell to negative 0.54 percent today, indicating the notes are expensive when compared with the average 0.84 percent for the gauge this decade through mid-2007, Bloomberg said.

Treasury 10-year note yields fell to an all-time low today as concern that the euro area’s debt crisis will cripple financial institutions underpinned demand for the safest assets. A government report Sept. 2 showed no jobs were added in August, reinforcing concern that the U.S. economy has slowed.

“Treasuries are expensive, and everyone knows they are expensive, but given the times, they can stay expensive,” said George Goncalves, head of interest-rate strategy at Nomura Holdings Inc. “Investors aren’t buying for yield right now. We are further along in the deleveraging process than we were when the crisis began, and people are still willing to buy Treasuries, which tells you that concern over credit globally remains.”

U.S. government securities returned 2.8 percent in August, the most since the depths of the financial crisis in December 2008, and have gained 8.1 percent this year according to a Bank of America Merrill Lynch index, outperforming the 9 percent decline in the Standard & Poor’s 500 index.

Benchmark 10-year yields declined 57 basis points last month, the most since a 71 basis point drop in December 2008, touching a record low of 1.97 percent on Aug. 18.