The iShares Barclays 20+ Year Treasury Bond Fund (TLT - News) is on track for a gain of 4% this week as the U.S. government debt ETF surges close to its all-time high.
Treasury yields fell sharply this week and bond prices rose as the European debt crisis returned again to rattle global markets. Yields on the 10-year Treasury notes are near record lows.
“Escalating concerns over Europe in addition to a struggling global economy have encouraged investors, institutions and governments alike to move a portion of their investment dollars to the relative safety of the US. This has resulted in a significant decline of the 10-year Treasury bond yield,” according to chartoftheday.com.
“This decline has brought the 10-year Treasury bond yield to a 112-year low. The decline of the 10-year Treasury bond yield has been significant enough to bring the 10-year yield near resistance of what is a 26-year downtrend channel,” it added.
The rally in Treasury ETFs reflects concerns that Greece will leave the euro, and also suggests investors are worried about deflation.
“The fear factor is again driving trading decisions on Wall Street. Investors looking for a safe place to stash cash and a way to sidestep Europe’s deepening debt crisis are dumping risky assets such as stocks and piling into the perceived haven of U.S. government bonds, driving down yields Thursday to new all-time lows,” USA Today reports.
“It seems like every time we get to new lows (on the 10-year note) people say we can’t go any lower, but we do. Uncertainty is what motivates people to buy Treasuries,” said Gregory Whiteley at DoubleLine Capital in the report.
Yields on the 10-year Treasury note were hovering around 1.7% on Friday.
10-Year Treasury Bond Yield
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iShares Barclays 20+ Year Treasury Bond Fund
treasury-etfFull disclosure: Tom Lydon’s clients own TLT.
