Treasury bond ETFs rallied in Monday’s risk-off market as yields on the 10-year note dropped below 1.9%.
The iShares Barclays 20+ Year Treasury Bond Fund (NYSEArca: TLT) jumped 1.3% at last check on above-average volume. Bond prices and yields move in opposite directions.
Monday’s rally was TLT’s largest gain of 2013 by far, and the bond ETF is testing its 50-day simple moving average. It hasn’t traded above this technical indicator since December.
Investors were unnerved by the looming sequester deadline in the U.S., and also a parliamentary election in Italy. [Italy ETF Swings Lower on Berlusconi, Election]
Treasury bonds rose and 10-year yields fell to month-long lows “as mounting uncertainty about the outcome of Italy’s election prompted investors to seek safe-haven assets,” MarketWatch reported.
“We’re starting to see short covering in Treasurys. Investors are trying to seek a safe haven because all of a sudden you’re starting to see a reversal in the peripheral debt markets,” said Tom di Galoma, managing director at Navigate Advisors, referring to the Italian and Spanish bond markets.