|Bid||102.12 x 8600|
|Ask||102.22 x 12000|
|Day's Range||101.72 - 101.96|
|52 Week Range||101.63 - 108.81|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.15%|
Is Volatility Set to Drop Further after Stock Market Rebound? 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. The issue that was squeezing bond investors hasn’t gone away. The inherent risk of rising yields still exists, and last week’s respite could prove to be temporary at least for bond markets.
What Caused the Slump in Precious Metals and Miners? Another element besides the fluctuations of the US dollar that could have led to the fall in precious metals is the US interest rate. The Fed has kept investors on their toes with the rise in interest rates playing on the equity market slump.
By Justin Sibears, Newfound Research This post ended up being more timely than we could have ever imagined as Credit Suisse announced that it would accelerate XIV’s maturity after the ETN lost more than ...
What Triggered the Stock Market Panic This Month? Since the onset of the current euphoric rise in stock prices after the US elections, the bond markets have remained somewhat muted. Until recently, the ten-year bond yields have been hovering near the 2.5% mark, around 20 basis points higher than the 2016 average of 2.3%.
The recent rout in the equity market was fueled by concerns over rising interest rates, which could increase costs for the industry. Investor anxiety about rising rates was triggered by comments from San Francisco Fed president John Williams on Friday, February 2. During his speech, Williams said he envisioned three or four hikes this year, and investor anxiety escalated further after the non-farm payrolls report indicated impressive job gains in January.
The US bond market’s (BND) troubles escalated last week as inflation expectations continued to rise. The first reason was the January FOMC (Federal Open Market Committee) meeting. The Fed left interest rates unchanged at that meeting but changed its outlook on inflation, saying that inflation (TIP) could pick up and stay near the 2% target.
What Boosted the Leading Economic Index in 2017? In its December meeting, the US Federal Reserve increased the federal funds rate by 0.25%, just as markets expected. This led to the narrowing of credit spreads between long-term and short-term yields, resulting in a flattening yield curve.
The reopening of the US government on Tuesday, hawkish comments from the central banks of Europe and Japan, and President Trump’s “America is open for business” speech at the World Economic Conference in Davos, Switzerland, had little impact on the bond market. According to the latest COT (Commitment of Traders) report released on January 26 by the CFTC (Chicago Futures Trading Commission), speculators increased their short positions on the ten-year bond with net short positions increasing from 89,259 contracts to 117,877 contracts. The core PCE (personal consumption expenditures) inflation data could be import since the Fed prefers this measure of inflation when making interest rate decisions.
Inflation in the United States seems to be rebounding. Moreover, U.S. equities have been rallying on strong economic fundamentals, leading to an increase in investors’ risk appetite and reallocation of funds from bonds to equities. Bond prices move inverse to bond yields.Source: ShutterstockWhat’s Moving Yields?
The US bond (BND) markets remained under pressure and closed lower for the week ended January 19. At the beginning of the week, a news article about China planning to cut down its purchases of US Treasuries triggered an initial sell-off. 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.
The key reason for the bond market sell-off was the fear that inflation is set to increase in the months ahead. According to data reported on January 12, the consumer price index (or CPI) rose 0.1%, bringing the year-over-year inflation figure to 2.1%. This rise in inflation could keep rate hike expectations elevated, leading to higher yields and lower bond prices.
On January 10, 2018, Bloomberg News broke a story that the Chinese government could be planning to slow down its purchases of US government debt (GOVT). The sudden spike in yields highlighted the risks that are faced by the US debt (BND) markets if its largest customer, China (FXI), changes its policy. The U.S. Treasury issues Treasury securities to borrow money from investors and uses it to fund the economy.
Treasury yields are rising and bond-related exchange traded funds are falling after the Bank of Japan revealed its intention to scale back its monthly bond purchases Tuesday and Chinese officials recommended ...
The troubles surrounding a flattening yield curve extended into the new year with the spread between the US ten-year and two-year Treasuries narrowing to a level last seen before the financial crisis of 2008. A flattening yield curve, if progress could lead to a yield curve inversion, could be a signal for a future recession. The reason for the yields falling lower was the lower level of inflation expectations.
The US FOMC December meeting minutes and the December employment data are key economic data releases that could impact markets this week.
The Fed rolled out another rate hike at its final meeting of 2017. The target range for the federal funds rate was increased by 0.25% to 1.25%–1.50%, and the Fed has…
Besides the slump of the US dollar during 2017, the other most important and most talked-about indicator is the US interest rate.