Exchange traded funds that invest in Treasury bonds have been moving higher despite fears over the U.S. budget deficit and high-profile investors betting against government debt.
Bond ETF investors are at a fork in the road, as uncertainty has plagued the fixed-income market. The Federal Reserve ends its bond-buying program less than two months from now, and investors are analyzing the slow-growth climate in markets and how bonds may fit into their portfolios.
PIMCO’s Bill Gross has also stepped up his bet against U.S. debt, Reuters reported this week.
Over the past four weeks, the yield on the 10-year Treasury note has fallen from 3.58% to 3.16%, its lowest level since December, reports Mark Gongloff for The Wall Street Journal. Many traders have abandoned their bets against Treasuries as bonds have rallied, but speculators are still net short, according to the latest CFTC data.
The bond market has not given in considering the general consensus to be bearish on bonds. Short bets against 10-year Treasuries peaked on Feb. 22, according to data from the Commodity Futures Trading Commission, and since then prices have risen about 3%, according to Tom di Galoma, managing director at Oppenheimer & Co. Yields have tumbled from 3.465%. [Treasury ETFs Rise But Jim Rogers Says Short Bonds.]