Speculation that the Group of 20 will step in to stop the European debt crisis from deteriorating caused Treasury bond exchange traded funds to lose momentum on Friday as cautiously optimistic investors returned to riskier assets.
iShares Barclays 20+ Year Treasury Bond (NYSEArca: TLT) was down 1.33% at last check Friday. iShares Barclays 7-10 Year Treasury Bond Fund (NYSEArca: IEF) was down 0.58%.
Long-term Treasury bonds trimmed some of their gains as global equities recover, report Cordell Eddings for Bloomberg. [Long-Term Treasury ETFs Jump On Fed’s $400 Billion Move]
Late Thursday, G-20 finance ministers and central bank governors promised that they were “committed to a strong and coordinated international response to address the renewed challenges facing the global economy.”
According to Governing Council Members, the European Central Bank may also step in to boost growth and ease concerns over the financial markets.
“The G-20 countries pledging help eases the safety trade some on the margins, but until we really have a concrete plan in place for Greece we are going to maintain the same market that we have been in,” Larry Milstein, managing director at RW Pressprich & Co., said. “In this market you just can’t be short Treasuries and you want to look to buy dips in prices.”
“Treasuries are coming off some as equities are performing better and there has been no more bad news to speak of,” Ian Lyngen, a government bond strategist at CRT Capital Group LLC, commented. “There is constructive chatter out of Europe about a potential rate cut, but the flight to quality motivation in the market remains the dominant theme.”
iShares Barclays 20+ Year Treasury Bond
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Max Chen contributed to this article.