The recent atmosphere in the U.S. economy as the stock markets seemingly pause for breath has created a bond-hungry atmosphere, potentially impacting related exchange traded funds (ETFs).
The Federal Reserve is meeting this week, setting off a buying spree in the Treasury market. On Tuesday, $40 billion of two-year notes were bid upon, and investors are bracing for two more auctions this week: $37 billion in five-year notes today and $27 billion in seven-year notes Thursday, reports Min Zeng for Dow Jones Newswires.
As of Monday, U.S. government debt prices rose, giving the picture of a weak stock market mixed with the allure of safe haven investments. Burton Frierson for Reuters reports that Wall Street appeared to be skeptical about the strength of an economic recovery in store for the United States this year, taking stock markets down with the doubt.
Treasury purchases by the Federal government lent some support on Monday as well, with the central bank buying Treasuries maturing in five to six years.
There is about a 2% weakness within the equity markets, and this is enough to fuel the demand for bonds and keep investors nervous about the overall recovery for the United States this year.
- iShares Barclays 7-10 Year Treasury (IEF): down 8.8% year-to-date
For more stories on Treasuries, visit our treasury bond category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.