RECENT Fixed Income ETFs RESEARCH
The non-farm payrolls report for June showed that the US economy added 223,000 jobs. This helped equities reduce losses. Wage growth remained tepid.
Investment-grade bond yields rose on the last day of trading last week as Greece’s creditors conditionally offered it financial aid to the tune of 15.5 billion euros.
US Treasury yields, especially those on long-term securities, rose with the hope that Greece would accept this eleventh hour deal.
A breakdown in negotiations led to Greece missing its payment due to the IMF on June 30. US equities reacted negatively to these developments.
The FOMC released its June 2015 monetary policy statement last week. Policymakers toned down their expectations for a rate hike in 2016 and 2017.
The Federal Open Market Committee’s June statement didn’t elicit a strong reaction in either direction from investment-grade bonds, especially not from Treasuries.
Due to the yields falling on Treasuries across medium-term maturities, fixed income ETFs investing in that maturity posted marginally higher returns.
Week-over-week, yields on investment-grade bonds barely moved. However, the meager movement didn’t represent a lack of activity in the secondary market.
As far as last week’s Treasury yields were concerned, two developments in Europe stood out—Greece’s debt negotiations and German bund yield movement.
While stock market volatility (VXX) has increased, bond volatility has seen a higher rise. You can expect high volatility in bonds (AGG) over the next few months.
The retail sales report was positive for equities, as it strengthens hope that the US economy will return to a strong footing following a weak first-quarter reading.
Bond market turmoil (BND) has been building up steam over the past month, and the gyrations continued to plague the markets well into this week.
The May non-farm payrolls report, which showed that 280,000 jobs were added in the month, led participants to believe that the Federal Reserve will hike rates this year.
US Treasury yields moved uniformly upwards across the yield curve in the week ended June 5, 2015.
Investment-grade bonds’ yields surged in the week ending June 5. The two jobs reports released last week were the primary drivers.
A rate hike might affect your investments in Treasuries and gold. The federal funds rate is a tool that the Fed uses to control the economy’s interest rate.
US benchmark yields rose to a seven-month high of 2.36% yesterday. But the long-term outlook for bond markets seems to be a low-for-long yield world.
Equity indices finished lower last week, and markets remain confused by a host of mixed economic readings throughout the month of May.
Yields on investment-grade bonds fell in the week ended May 29, primarily due to reports of a contraction in the US economy.
The strength in the US dollar against many of its counterparts, including the euro and the yen, made Treasuries attractive to investors, driving their yields down.