I find it interesting that long term bond prices have gone down, as have interest rates on new bonds. I would have thought that lowering interest rates should have raised the prices of existing bonds.Is there a huge outflux of people exiting the U.S. market entirely, and selling all U.S. dollar securities?
Greetings aesirai,Is there a huge outflux of people exiting the U.S. market entirely, and selling all U.S. dollar securities?I don't think it is that as much as that there are some differences between short-term and long-term rates. For instance the Federal Reserve only controls short-term interest rates while long-term rates aren't set by them. Secondly, there was talk before about the number of Treasuries decreasing and with a smaller supply this would drive prices up as people snatch up longer-term bonds although now I think that isn't going to be the case for a while.Just my thoughts on the subject,JB
Fear of over spending stimulus bringing back some inflation and also disappearing surpluses are causing the yield curve to become more steep.Long bonds are a bargain compared to short term notes. Everyone wants safety, short-term. If one is willing to take a shot, he can get some decent yields 10 years out.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |