Common sense says bond investors might want to lighten up on their holdings of long-term government bonds and other fixed-income investments after the Federal Reserve warned of coming bond market turbulence in Wednesday’s release of the Fed’s April meeting minutes. But, on the other hand, why exit the bond market when U.S. economic data for April and May keeps coming in below expectations, despite the consensus investment thesis that the economy would — and will — bounce back? Well, the hoped-for rebound Wall Street keeps betting on was a no-show again Thursday. The so-called Philly Fed manufacturing index came in weak. Existing home sales for April came in light, too. Even the latest weekly reading on first-time jobless claims was a miss, rising 10,000 to 274,000, above the 270,000 Wall Street had forecast. The result: bond investors keep buying U.S. government bonds....So, once again investors reacted more to soft economic data than they did warnings of market volatility and potential losses in the future when the inevitable Fed interest rate increases begin. Need proof? The yield on the 10-year Treasury note fell Thursday, which means bond prices rose, a day after the Fed warned of potential pain once rates rise in response to rate increases. “Yields on the U.S. 10-year Treasury dipped following the release of weaker-than-expected housing data and in increase in jobless claims,” Tradeweb told clients. The 10-year was at 2.19%, down from Wednesday’s intraday high of 2.29%. Investors will again be listening closely to any hints of when the Fed might hike rates when Yellen delivers a speech on the outlook for the economy this afternoon. In early trading Friday the yield on the 10-year Treasury has dropped once again, and is now trading at 2.167%.
Access Investments-Building Awareness - European Union-ROMANIA
Sunday, June 7, 2015
Common sense says bond investors might want to lighten up on their holdings of long-term government bonds and other fixed-income investments after the Federal Reserve warned of coming bond market turbulence in Wednesday’s release of the Fed’s April meeting minutes. But, on the other hand, why exit the bond market when U.S. economic data for April and May keeps coming in below expectations, despite the consensus investment thesis that the economy would — and will — bounce back? Well, the hoped-for rebound Wall Street keeps betting on was a no-show again Thursday. The so-called Philly Fed manufacturing index came in weak. Existing home sales for April came in light, too. Even the latest weekly reading on first-time jobless claims was a miss, rising 10,000 to 274,000, above the 270,000 Wall Street had forecast. The result: bond investors keep buying U.S. government bonds....So, once again investors reacted more to soft economic data than they did warnings of market volatility and potential losses in the future when the inevitable Fed interest rate increases begin. Need proof? The yield on the 10-year Treasury note fell Thursday, which means bond prices rose, a day after the Fed warned of potential pain once rates rise in response to rate increases. “Yields on the U.S. 10-year Treasury dipped following the release of weaker-than-expected housing data and in increase in jobless claims,” Tradeweb told clients. The 10-year was at 2.19%, down from Wednesday’s intraday high of 2.29%. Investors will again be listening closely to any hints of when the Fed might hike rates when Yellen delivers a speech on the outlook for the economy this afternoon. In early trading Friday the yield on the 10-year Treasury has dropped once again, and is now trading at 2.167%.
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