The Latest News:
- Ultra-short-term bond funds have seen yields rise as investors anticipate the eventual Federal Reserve rate hike. [Short-term, Money Market Bond ETFs Reveal Rising Rate Expectations]
- However, a surprise dip in hourly U.S. wage growth over December overshadowed economic improvements, pushing investors back into bonds, reports Joseph Adinolfi for MarketWatch.
- With concerns over wage growth marring a rosy economic outlook, the Fed could push off on rates, Naeem Aslam, an analyst with Avatrade, said in the article.
- “[The payrolls data was] a balanced mix and a Fed dilemma in the sense that you have the jobs strength but no sign of wage inflation,” David Ader, head of government bond strategy at CRT Capital Group LLC, said in the article.
- Consequently, with the pullback in rate expectations, short-maturity bonds experienced the largest move, with two-year yields dipping to their lowest since December 16 – yields and bond prices have an inverse relationship, so lower yields correspond to higher prices.
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Max Chen contributed to this article.