Risk-Off Sentiment Strengthens Slide In Treasury Yields

May 15 11:05 2019 Print This Article

Maybe it’s a reaction to the recent escalation in the US-China trade conflict. Or perhaps the crowd is turning more cautious because of the runup in global equity markets earlier in 2019, before the trade row between Washington and Beijing undercut the bulls. Whatever the reason, yields on key Treasury maturities are trending down and the slide looks set to continue for the foreseeable future.

“We really need to get past trade negotiations, if we want to know what the next steps are for the Treasuries market,” says Subadra Rajappa, head of US rates strategy at Société Générale. “At the moment, the [Treasury] market is still priced to perfection given the current state of trade discussions.”

Bidding up Treasury prices (and thereby pushing yields down) is everyone’s favorite trade when the economic or geopolitical outlook looks more uncertain than usual. By that standard, it’s no surprise that the latest turmoil over trade between the planet’s two largest economies has investors running for cover by hiding in the safe haven of US government bonds.

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About Article Author

The Capital Spectator

CapitalSpectator.com is a finance/investment/economics blog that’s edited by James Picerno. The site’s focus is macroeconomics, the business cycle and portfolio strategy (with an emphasis on asset allocation and related analytics). In late-2009, the Eastern Economics Journal named Picerno as one of the nation’s “top economics bloggers”. Picerno is the author of Dynamic Asset Allocation: Modern Portfolio Theory Updated for the Smart Investor (Bloomberg Press, 2010) and Nowcasting The Business Cycle: A Practical Guide For Spotting Business Cycle Peaks (Beta Publishing, 2014). His articles on finance and economics have appeared in a variety of publications and news outlets over the years, including The Atlantic, Financial Advisor, BankRate.com, HorsesMouth.com, and Bloomberg Briefs: Economics. He also pens a daily economics column for the Saxo Group’s TradingFloor.com web site. Picerno has been writing about investing and macroeconomics since the early 1990s at Bloomberg, Dow Jones and other media groups before becoming an independent writer/analyst in 2008. He also offers consulting services on asset allocation and portfolio strategy, the US business cycle, and related data analytics in R and Excel.

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