Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 

U.S. Government Bond Yields Fall

share with twitter share with LinkedIn share with facebook
share via e-mail
0
03/20/2017 | 09:16pm CEST
By Min Zeng 

U.S. government bond yields fell to their lowest level in more than two weeks on Monday, extending last week's slide as the Federal Reserve soothed worries over a big rise in yields.

The yield on the benchmark 10-year Treasury note was 2.472% late Monday, compared with 2.5% Friday. It was the yield's lowest close level since March 1. Yields fall as bond prices rise.

Bond yields had jumped earlier this month with the 10-year yield rising above 2.6% as investors anticipated the Fed would raise short-term interest rates. The Fed acted as expected last Wednesday, but its signal of a gradual path of tightening has attracted buyers back to the bond market.

Derivative markets suggest investors are expecting bond-market fluctuations to stay contained. The Bank of America-Merrill Lynch MOVE Index fell to 60.4 last Thursday, its lowest since October. The index tracks trading in derivatives on Treasury bonds and measures the size of expected government-bond price swings over a certain period.

Some traders expect the 10-year yield to trade between 2.4% and 2.6%.

"The bond market seems to be stuck here," said Anthony Cronin, a Treasury bond trader at Société Générale SA. "The next rate hike is at least a few months away."

Wagers on higher bond yields, or short bets, have pulled back lately. When investors dial back shorts, they return to the bond market as buyers, which helps send yields lower.

Hedge funds and money managers accumulated a net $89 billion worth of shorts for the week that ended March 14, a day before the Fed's rate decision, via Treasury futures, according to TD Securities. That was down from $93.9 billion a week earlier. The net shorts reached $100.7 billion in early January, the highest since 2008.

Fed-funds futures, used by hedge funds and money managers to bet on the Fed's policy outlook, priced in 58% that the Fed would raise rates again at its June meeting, according to CME Group.

The odds for a rate increase by the Fed's September meeting were 80%, suggesting that many expect the Fed could wait until the third quarter to raise rates again.

A number of Fed officials are scheduled to speak this week, including Fed Chairwoman Janet Yellen on Thursday.

Some analysts caution that markets may be complacent to the risk of a more aggressive tightening path from the Fed, a case that would rattle the bond market and cause a sharp rise in yields.

Even as inflation data have pointed to upticks in consumer prices, the latest University of Michigan consumer sentiment survey Friday showed inflation expectations over the next five to 10 years hit a record low earlier this month. The survey bolstered demand for Treasury bonds Friday.

Inflation is the big threat to long-term government bonds. Higher consumer prices reduce the real purchasing power from bond investments.

Deepa Majmudar, money manager at J.P. Morgan Asset Management, warns that some investors may underestimate the risk of inflation in the longer term.

To hedge against inflation risk, she has been holding Treasury inflation-protected securities, a popular asset class for investors looking for inflation protection.

Write to Min Zeng at [email protected]

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news
Date Title
01:04a INTERNATIONAL CONSOLIDATED AIRLNS : British Airways outage has not canceled RDU flight to London; fliers should check status
12:47a RDOS REGIONAL DISTRICT OF OKANAGAN SIMILKAMEEN : Boaters and Tubers Use Caution on Local Lakes and Rivers
12:38a U.S. Credit Czar and FICO Luminary Howe Applauds Credit Karma for Removing Misleading Advertisement
12:30a Mother of Uber CEO killed in boating accident - newspaper
05/27 BROOKFIELD RENEWABLE PARTNERS LP : "This was his lake to run
05/27 EDITOR'S NOTE : Your weekly real estate market report is provided by Paul
05/27 BROOKFIELD RENEWABLE PARTNERS LP : PALMYRA TWP. (Pike) Brookfield dedicates Lamberton Lane
05/27 INTERNATIONAL CONSOLIDATED AIRLNS : British Airways cancels flights as major IT failure causes worldwide delays
05/27 CITY OF BEND OR : Bend’s watershed not affected by the Cougar Butte Fire
05/27 OPEN DOOR : Approximately 1,500 children and parents visit Chamber of Deputies on Open Doors Day
Latest news
Advertisement
Hot News 
-4.92%SUN PHARMACEUTICAL INDUSTRIES : Pharma 4Q Profit Falls 13.6%
2.28%ELECTRA PRIVATE EQUITY : Epiris to keep focus on UK assets after Electra split
-4.04%BA and Iberia plan third-party booking surcharge, Amadeus shares hit
8.47%SPIRAX SARCO ENGINEERING : Sarco to buy thermal tech firm Chromalox for $415 million
3.25%Fosun, others eye Australia's Origin Energy gas assets worth $1.5 billion - sources
Most Read News
05/26 Merkel pushes back against renewed Trump criticism of surplus
05/26 Chipotle says hackers hit most restaurants in data breach
08:29a THE LATEST : British Airways cancels most flights from London
05:06a In Aramco IPO pitch, Canada plays up its natural resources expertise
05/26 JBS : Brazil's JBS says Joesley Batista resigns as chairman
Most recommended articles
05/22 NOBLE : shares tumble after S&P ratings downgrade
01:59p Reliance Communications hit by Indian mobile price war
01:51p GENERAL MOTORS : GM says ISS advises against Greenlight share plan, board nominees
01:27p FAIRFAX FINANCIAL : to sell 12.2 pct of Indian insurer ICICI Lombard
05:06a In Aramco IPO pitch, Canada plays up its natural resources expertise