iShares 1-3 Year Treasury Bond
The demand for 4-week Treasury bills remained subdued last week
A considerable amount of $35 billion was offered for the weekly four-week T-bills auctioned on Tuesday, March 4, 2014.
Must-know trends that affect pricing at T-bill auctions
The U.S. Treasury holds weekly auctions for the four-week, 13-week, and 26-week Treasury bills. But its auctions for 52-week Treasury bills (SHY) take place only once a month.
Why Kocherlakota wants the Fed to be free in its decision making
Kocherlakota gave a presentation at the annual American Economic Association conference. He was firmly in favor of letting the Fed be free in its decision making.
Clearing up a common misconception about bond ETF management
A bond ETF is managed by a human (sometimes several). A common misconception about bond ETFs is that they simply hold all the securities in the index they track.
Must-know: Investor expectations and key jobs reports
On Friday, April 4, the U.S. Labor Department released its Employment Situation Summary report for March. The Consensus forecast for Friday’s jobs number was 206,000.
Implications of Fed Decisions on Precious Metals and the Dollar
A rate hike and the dollar are closely tied to each other since a higher interest rate would mean more money flowing into the United States.
The Tails Of The Yield Curve May Provide Value
The tails of the yield curve may provide more value due to low inflation.
Is the Fed Sure What It’s Doing?
In this series, we’ll analyze Fed members’ comments in June 2017 to better understand their outlooks on the US economy and how they justify their hawkish or dovish stances.
Why demand is rising for 3-year Treasury notes
The U.S. Department of the Treasury holds auctions for three-year Treasury notes (or T-notes) each month. Three-year notes are at the short-end of the yield curve.
How the Fed funds rates and inflation affect interest rates
As the economy expands creating inflationary pressures, the Fed raises the Fed funds rate to control inflation.
Key for Investors: Understanding Inflation and Its Implications
Inflation represents a rise in the general price level in a country or region. The higher the inflation, the lower the quantum of a particular good that can be purchased.
Unique opportunities for investors given new monetary policy outlook
I’ve discussed on The Blog how an investor can think of the federal funds rate and QE as a gas pedal. Sometimes it’s good to ease off a bit to limit the pace of acceleration.
T-Notes Auction: Poor Demand amid the FOMC Meeting
The overall demand fell for the seven-year T-notes auction because the FOMC meeting didn’t give any clarity regarding an interest rate hike in the future.
How Saudi Arabia’s Bond Sale Affects US Treasury Bonds
Saudi Arabia has also been involved in the sale of US Treasuries. The country is the 15th-largest holder of US Treasury bonds in the world.
How Green Bonds Can Help Diversify Investor Base
Even if we assume that green bonds don’t offer any significant premium over conventional bonds, there are many who believe in other noteworthy advantages of green investing.
Why Did the German 2s30s Spread Dip on Quantitative Easing?
The 2s30s spread is the difference between the yield on the 30-year bond (TLT) and the yield on the two-year bond (SHY).
Gundlach: Negative Interest Rates Are the Definition of Deflation
Gundlach has no interest in sovereign debt at negative interest rates. He said that it’s a “guaranteed loss.” Bill Gross shares this view.
Bill Gross Says These Instruments Have Investment Opportunities
Gross has suggested some short-term duration investment products since he believes economic growth may not reach the level of investor expectation.
Must know: The trading markets available to the investors
Retail investors mostly prefer the secondary market for buying Treasuries as it eliminates a lot of paper work and other administrative hassles.
Why Gundlach Believes the Bond Market Is Set Up for a Rally
Prominent bond investor Jeffrey Gundlach discussed the bond market’s performance and his expectations for the bond market in a recent interview.
Assessing Sovereign Bonds amid Heightened Global Uncertainty
Global uncertainty, Brexit, and the prospect of further easing from central banks in developed markets have spurred demand for government debt.
When The Net Asset Value Of A Bond ETF Differs From Market Price
The Intraday Indicative Value gives us a more real-time value than the bond ETF’s NAV. It’s considered an implied value of an ETF.
Statement Suggests Gradual Rise in the Federal Funds Rate
The Fed raised the target range for the federal funds rate from 0%–0.25% by 25 basis points. Now, the key interest rate in the US will be 0.25%–0.50%.
Investment Avenues during the Rise of Short-Term Interest Rates
Bill Gross thinks the central banks should implement their strategies very carefully and cautiously in this scenario.
Why Gross Thinks Global Investors Will Rush toward US Treasuries
As the Fed moves toward a gradual, continued rate hike process, it’s important for investors to keep an eye on the other central banks.
What Happened at the US Treasury Auctions in the Week Ending June 10?
It’s expected that the Fed may increase the interest rate soon, and 30-year Treasury bonds auction are closely watched by stock and bond investors.
Will US Inflation Stay under 2%?
The Federal Reserve’s ideal inflation rate is 2% in order to ensure stability and employment—in short, a healthy economy.
The US economy is the ‘last man standing’ among advanced nations
The large drop in crude oil prices gave consumers more money to spend. Demand should be higher due to robust consumer sentiment data.
2-Year T-Notes Attract Higher Market Demand in March 2015
Primary dealer takedown was lower due to higher market demand. It was 36% of competitive accepted bids—down from 38.5% in February’s auction.
How an Operational Switch Could Benefit the US Economy
An operational switch could help, given zero-bound short-term yields, and long-term yields dampened by low growth and inflation expectations.
Where Green Bonds Could Fit into Your Portfolio
As we’ve seen, green bonds add value to the environment. But they can also provide you with diversification benefits.
What Dalio Thinks about Equity Market Rally and Bond Market Sell-Off
Expectations for a stronger economic environment, business-friendly policies, less regulation for businesses, and policy reformation are driving the equity market (SPY) (QQQ).
The Difference between Corporate Bonds and Treasuries
Bond investors should understand the difference between Corporate Bonds and Treasuries. Below is a list of the key differences between the two.
Gold versus 10-Year Treasury Bonds
The negative interest policy of the central banks is casting government bonds as a futile choice for investors compared to stocks and gold. As a result, bond prices dipped and yields started rising.
Why the bid/cover ratio for the 6-month Treasury bills declined
Despite an increase in the six-month Treasury interest rates, last week’s coverage at 4.46x was lower than the previous week’s 4.76x bid/cover ratio.
Why did the T-Notes auction see a sudden rush for 10-year notes?
We can attribute the lower yield recorded in February compared to January to higher demand for safe-haven assets like U.S. Treasuries, which have increased in 2014.
Why was the short-term T-Bills auction strong last week?
The short-term securities that have already been auctioned last week include four-week, 13-week, and 26-week T-Bills.
Key drivers for Treasury yields after the June FOMC release
The Fed’s third Federal Open Market Committee (or FOMC) meeting of the year took place June 17–18. Always a market-moving event.
So what’s an investor to do in a rising rate environment?
If you have a bond portfolio that’s heavy with long-term bonds, you can potentially reduce your interest rate risk by rebalancing your portfolio to increase exposure to short-term bond ETFs.
A key guide to positioning your portfolio for rising rates
While longer-term interest rates have remained stable, the prospect for an early Fed tightening is exerting downward pressure on the prices of shorter-maturity Treasury bonds.
Recommendation: Consider hedging against rising interest rates
As the Fed continues to reduce its Quantitative Easing program, Matt Tucker explores ways to attempt to hedge against rising interest rates in your bond portfolio.
Why international dividend stocks are worth pursuing
While Russ would be wary of seeking income at all costs and ignoring valuations, there’s one “bond-like” equity market segment that he believes is worth pursuing: International and global dividend stocks.
What If Low Interest Rates Don’t Result in Increased Lending?
With most of the developed world at near zero or negative yields, the contribution of lowering interest rates to the velocity of money is diminishing.
Must-know: Why demand for 6-month T-bills continues to grow
Demand for six-month Treasury bills has seen a continuous uptrend over the past four weeks, as we’ve seen in the rising bid-to-cover ratio.
Why has productivity growth in the US economy slowed?
Tarullo argued that the productivity growth in recent years has been disappointing. He supported his argument with statistics.
Why are investors less and less attracted to bonds?
As improved economic conditions result in increased interest rates, bonds as an asset class lose their attraction. (Improved economic conditions simply mean the country as a whole is better off.)
Why did the 4-week rally in 6-month T-bill demand end last week?
This week saw the end of a four-week rally for six-month T-bills, as seen the in bid-to-cover ratio falling for the first time since March 17.
Must-know drivers that impact Treasury yields and ETFs like TLT
For Treasury securities, yield is determined by economic conditions and the Fed’s monetary policy. When the economy is on a downturn, investors prefer to park their funds in safer avenues, such as Treasuries.
Knowing the Treasury discount rate and yields before investing
Investors can take an informed decision by knowing the rate of return on their investment.
Dove or hawk? Why monetary policy stance matters to investors
This series gives you insights into the monetary policy stance of each of the dovish FOMC members. Let’s start by understanding the structure of the FOMC and what it is that differentiates doves and hawks.
Must-know: The financial situation under review—June FOMC
Broad stock market indices were boosted by a more optimistic assessment of near-term economic prospects, and supported by continued low interest rates.
Why the Fed funds rate influences investment decisions
When deciding about investing in short-duration versus long-duration investments, investors often look at current and future expectations for the Fed funds rate.
The Fed taper: How quantitative easing affects the yield curve
QE is an unconventional form of monetary easing—the Fed’s way of putting in more money into circulation in the economy.
What Does Gundlach Have to Say about the Fed’s Next Moves?
As far as the Fed’s next moves are concerned, Gundlach said that if the market forces are allowed to prevail, interest rates should go up even in the next downturn.
Markets Spooked as Yield Curve Inverts for First Time since 2007
The Treasury yield curve turned negative on March 22. The ten-year yield fell below the three-month yield for the first time since 2007.
Bank of America Expects the Markets to Fall in 2019
Bank of America’s equity and quantitative strategist, Savita Subramanian, expects a decline in the S&P 500 (SPY) in 2019—compared to 2018.
Yield Curve Inverts for the First Time since 2007
A yield curve tracks the yields of Treasury securities maturing at different times.
Bank of America’s Suggestions for Investors in a Market Decline
In a note published last week, Bank of America Merrill Lynch equity and quantitative strategist Savita Subramanian said, “We believe the peak in equities is likely before the end of 2019.”
Howard Marks: This Is the Single Biggest Equity Market Risk
Howard Marks said at the 2018 Delivering Alpha Conference on July 23 that the Fed’s hawkish stance is the single biggest risk for the equity market (SPY).
What Does the Flattening of the Yield Curve Mean for Gold?
It doesn’t come as a surprise that Wall Street is concerned about a potential slowdown, as the spreads have significantly narrowed between the two-year and ten-year Treasury yields.
How Is the Fed Influencing Precious Metal Demand?
The Fed has hinted that there could be two more interest rate hikes this year, for a total of four hikes in 2018.
What’s the Impact of Interest Rates on Precious Metals?
Monetary policies have been crucial in determining the movement in precious metals.
What’s Supporting Gold Prices and What’s Not
On Thursday, silver was up 0.8% to $16.6 an ounce.
US Yields Peak and Gold Slumps. Are the Dots Connecting?
US ten-year Treasury note yields (IEF) hit a high mark of approximately 3.1% today—a record since July 2011.
Disappointing April Jobs Report: Lower June Rate Hike Odds?
For the week ending May 4, the ten-year (IEF) yield closed at 3% and depreciated by 0.8 basis points. The two-year yield (SHY) closed at 2.50%.
Treasury Yields Hit 3% and Gold Fell: Coincidence?
In addition to the US dollar playing on precious metals, US interest rates and the decisions by the Federal Reserve have also historically had a substantial impact on these safe havens.
Why Interest Rate Spreads Are Decreasing Again
In April, the yield spread has declined to the lowest level since the Great Recession and could decline further if inflation doesn’t accelerate.
Why Bond Markets Returned to Worrying about Flattening Yield Curve
The US bond markets moved marginally higher in the previous week as investors’ worry about rising bond yields fell after the February inflation print showed stable growth.
Double Whammy: Rate Hikes and Balance Sheet Trimming
The US Federal Reserve has accumulated huge quantities of fixed-income (BND) securities as part of its three quantitative easing programs, QEs 1, 2, and 3.
Why the US Economy Could See a Higher Deficit
A government budget deficit occurs when an economy’s annual revenue is less than its total expenditure.
Will the Bond Market Rebound along with Equity Markets?
US bond markets found some relief in the week ending February 16, as bond yields retreated from their multiyear high at the end of the week.
How the Interest Rate Hike Is Playing on Precious Metals
Another element besides the fluctuations of the US dollar that could have led to the fall in precious metals is the US interest rate.
Is the Leading Credit Index Signaling Any Business Cycle Changes?
This constituent of the LEI is an economic model, constructed by modeling changes in six financial market instruments.
Why Bill Miller Thinks Bond Bull Market May Be Coming to an End
Bill Miller said, “Bonds, in my opinion, have entered a bear market, but one that is likely to be benign for the next year or so.”
Are Bond Yields Set to Move Higher this Week?
The US Treasury is not able to issue any more debt until the debt ceiling is raised, which could increase the volatility in the bond markets.
Your Guide to the US Debt Ceiling
The current debt ceiling is likely to be breached on January 19, and once that happens, the US Treasury must stop issuing any new debt (SHY).
Why the US Bond Market Moved Lower Last Week
The core CPI of 0.3% pushed the annual number up by 0.1% to 1.8%.
Interest Rate versus Gold: Interest Rate Wins Again
Gold is a non-yield bearing asset that reacts negatively to rises in the interest rate.
Will Bond Yield Spreads Continue to Get Narrower?
The US bond (BND) markets returned to weakness last week after a minor bout of enthusiasm following the tax cut announcement.
Will Gold Move with US Interest Rates?
Though the precious metal prices have been on an upswing over the past few weeks, the streak could end due to the increased probability of Fed rate hikes in 2018.
How the Leading Credit Index Tracks US Credit Conditions
Understanding the Leading Credit Index The Conference Board LCI (Leading Credit Index), a constituent in the LEI (Leading Economic Index), is published every month and tracks credit conditions in the US economy by following changes in six financial market instruments: the two-year swap (SHY) spread (real time) the three-month LIBOR[1.Intercontinental Exchange London Interbank Offered Rate] (SCHO) […]
What to Make of the Pullback in Bond Yields Last Week
The US FOMC December meeting minutes and the December employment data are key economic data releases that could impact markets this week.
How Gold Reacted to Interest Rate Hike in December
Besides the slump of the US dollar during 2017, the other most important and most talked-about indicator is the US interest rate.
All 4 Precious Metals Rose on December 20, 2017
All four precious metals had an up day on December 20, 2017. Gold increased 0.43% on the day and closed at $1,267.80 per ounce.
Why Bond Market Yields Rose Last Week
The US bond (BND) markets witnessed surprising selling last week despite the passage of the tax reform bill.
Why Bond Market Speculators Increased Bullish Positions Last Week
The Federal Reserve lowered its unemployment rate projection to 3.9% for 2018 and raised its GDP forecast.
How the Federal Reserve’s Rate Hike Affected Precious Metals
Precious metals and miners saw some relief on December 13 after the Fed raised rates as expected. Sibanye Gold (SBGL), Aurico Gold (AUQ), and Goldcorp (GG) rose 3.5%, 3.6%, and 5.8%, respectively.
How Eager Are Precious Metals to Hear the Fed’s Decision?
Gold, silver, and platinum all had a down day on Tuesday, December 13, mainly due to speculations over the Federal Reserve’s pending interest rate decision.
Bill Gross: How Cost of Carry Could Change Investor Preference
Gross believes that in return for cost of carry, if investors get risk-adjusted returns that will be unfruitful compared to the benchmark, they could shift their holdings to other asset classes.
Waiting for the Fed’s Decision: The Reaction of Precious Metals
Although the US dollar has been the most important element contributing to changes in precious metals, the upcoming December meeting of the Federal Reserve has taken all of investors’ attention.
Why Bond Market Speculators Cut Bullish Positions Last Week
The US bond (BND) markets responded to the series of positive economic data releases from the US last week.
What Leads to Yield Curves Flattening
Factors leading to yield curves flattening There are multiple factors that can affect the shape of yield curves. Bonds (BND) with different maturities react differently to changes in economic conditions and expectations. For example, when the US Fed announces an interest rate hike, short-term bonds (SHY), which are to the left side of a yield curve, react […]
Assessing the Risk of a Flattening Yield Curve
St. Louis Fed president and CEO James Bullard gave a presentation at a regional economic briefing on December 1. Throughout this series, we’ll analyze Bullard’s take on the risks of an inverted yield curve.
Why Bond Market Speculators Are Betting on Further Fall in Yields
The US bond (BND) market performance was mixed for the week ending December 1 as volatility increased.
The Leading Credit Index: October Update
The Leading Credit Index for October was reported to be -0.70, improving from the revised September reading of -0.64.
Could the Federal Reserve Decision Move Precious Metals?
Precious metal market participants will be closely watching the economic numbers that come out of the US, especially those that give an indication of the country’s inflation level.
Interest Rate Rise or No Rise: Where Precious Metals Could Move
Market participants were eyeing the Fed’s meeting minutes that came out on Wednesday, November 22, 2017. Precious metals have a negative relationship to interest rates.
Understanding the Sharp Rise in Consumer Expectations in October
The November Conference Board LEI reported the average consumer expectations for business conditions for October at 0.96, a sharp increase from the September reading of 0.43.
What Decreasing Weekly Unemployment Claims Say about the US Economy
In the Conference Board Leading Economic Index, the average weekly unemployment claims have 3.0% weight.
What Do Speculator Positions Tell Us about the Bond Markets?
The flattening of the US yield curve continued to keep bond market (BND) investors anxious last week.