The relentless slide in Treasury yields the past three months has been profitable for bond exchange traded funds that invest in U.S. government debt.
Treasury ETFs have performed well on deflation fears and the safe-haven trade as global markets brace for the second Greek election next month that could determine the country’s fate in the euro.
With 10-year note yields hovering around 1.7%, the natural question is how much more can rates drop from already record lows. [Treasury ETF Rally Threatens Stocks]
Hedge funds have been piling into the 30-year Treasury bond, which sets up the possibility of a powerful countertrend rally if markets get any good news on Europe’s debt crisis.
Hedge funds appear to be betting on a drop in interest rates, WSJ.com’s MarketBeat blog reports.