With commodity prices falling, traders are anticipating lower inflation, which would help preserve the value of fixed-income payments. Since long-term debt securities are more sensitive to the inflation outlook, Treasury bond funds with longer durations are outperforming.
“We got what we expected from the Fed and now the oil price continues to slide down,” Jens Peter Soerensen, chief analyst at Danske Bank A/S, told Bloomberg. “Short term this pushes down people’s inflation expectations. … We are pretty confident on bonds in general.”
iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT)
For more information on the Treasuries market, visit our Treasury bonds category.
Max Chen contributed to this article.