bond futures

bond futures rise

May 20th, 2013

Bond Futures – The longest decline in Treasuries this year has left U.S. government debt the cheapest since March 2011 when measured by real yields and the best relative value compared with German bunds in more than two decades.

After inflation, 10-year U.S. notes yielded 0.91 percent last week, or 1.77 percentage points more than real yields on U.K. gilts, the widest spread in 25 months. Versus Germany, the securities are the least costly in 23 years when adjusted for the recent record-low interest rates around the world that distorted the normal relationship, according to FTN Financial.

Federal Reserve Chairman Ben S. Bernanke is counting on Treasuries to contain borrowing costs as the central bank buys $85 billion a month in securities to sustain the economic recovery that lifted U.S. consumer confidence to the highest in almost six years. The better relative yield for U.S. bonds may help bolster demand even as Warren Buffett said this month that he pitied fixed-income investors because of about record-low interest rates.

Continue reading »

bond options

bond futures drop

May 9th, 2013

Bond Futures – U.S. 30-year bonds rose, pushing the yield down from the highest in a month, amid speculation rates near 3 percent and falling inflation expectations will attract investors when the nation sells $16 billion of debt today.

The securities advanced for a second day before a government report that economists said will show initial claims for jobless insurance climbed from a five-year low last week. Treasuries have returned 0.4 percent in 2013, according to Bank of America Merrill Lynch indexes, even as equities have surged, as the Federal Reserve’s debt purchases kept borrowing costs under downward pressure.

“Treasuries have been remarkably resilient despite the rally in global equities, reflecting abundant liquidity provided by central banks,” said Nick Stamenkovic, a strategist at RIA Capital Markets Ltd. in Edinburgh. “The recent concession at the longer end should ensure the 30-year bond auction is comfortably absorbed.”

Continue reading »