U.S. Treasury bond exchange traded funds rose Monday while stocks weakened on reports the congressional “supercommittee” has been unable to put a deal together on reducing the U.S. deficit before a key deadline.
Europe’s lingering debt crisis is also pushing Treasury ETFs higher. In an attempt to safeguard assets, investors have sought refuge in U.S. Treasuries.
The iShares Barclays 20+ Year Treasury Bond (NYSEArca: TLT) rose 0.8% in Monday’s premarket.
Yields on the 10-year note were trading below 2% on Monday. Bond prices and yields move in opposite directions.
Following reports of the supercommittee’s failure, the biggest rally in U.S. government debt since 2008 shows no signs of slowing even though yields are roughly the lowest on record, Bloomberg reported Monday.
“It’s the contagion factor that’s still bothering the market,” Paul Horrmann, a broker at Tradition Asiel Securities Inc., said in a separate Bloomberg report. “You’ve got Europe and the question is whether this is just something they can snuff out and put to bed, or is it really going to ripple into a major problem.”
U.S. Treasuries have been the go-to asset during any signs of global economic uncertainty as it is the largest and most liquid market.