Why US Treasuries are surprising investors – The National

Why US Treasuries are surprising investors – The National

The moves seen in 30-year bonds are subject to structural forces that simply don't change overnight. On Monday, the long bond opened at a yield of 0.99 per cent, down 30 basis points from where it closed the last trading session and the first time ever it fell below 1 per cent.. On Tuesday, the long bond opened at 1.06 per cent.. The 30-year yield rose 50 basis points in two sessions in February 1980 and fell 69 basis points in two sessions in November 2008, from 4.12 per cent to 3.43 per cent.. Thirty-year Treasuries are among the purest expressions of the long-term outlook for US economic growth, inflation and the path of interest rates available in financial markets.. The assumption is that lower rates would stimulate the economy, leading to higher growth and inflation, which would eventually cause the central bank to bring rates back up again.. The long bond spans multiple economic cycles.. There's virtually no risk that the central bank will raise interest rates again out of fear that the US economy can't withstand it.. After the violent sell-off in risk assets to start the week, Wall Street's base case was for the Fed to drop