|Bid||118.37 x 100|
|Ask||118.90 x 10000|
|Day's Range||118.43 - 119.13|
|52 Week Range||116.51 - 129.57|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.15%|
In a recent speech after the March FOMC (Federal Open Market Committee) meeting, Loretta Mester, president of the Federal Reserve Bank of Cleveland, sided with Fed Chair Jerome Powell’s view that a flattening yield (AGG) curve doesn’t signal a weakness.
In a presentation given by James Bullard, president of the Federal Reserve Bank of St. Louis, he said the yield curve could invert by the end of 2018. Although the presentation was four months ago, it still holds true since the yield curve has flattened more than what it was in December 2017. In his presentation, Bullard laid out a few conditions that could lead to the yield curve inversion.
The primary reason cited by the FOMC (Federal Open Market Committee) for holding off on interest rate hikes since 2016 was lagging inflation growth. Whenever the Fed signaled rate hikes, the yield curve flattened since investors were not convinced that inflation (TIP) growth would pick up the pace, which would limit the Fed’s ability to raise rates. The Fed has set a target of 2% inflation (VTIP) growth, at which point the economy is expected to be running at a normal pace.
It’s difficult to pinpoint a single reason for changes to the yield curve’s slope. First, any changes to the Fed’s interest rate immediately impact the yield curve at the short end, and the projections for long-term rates dictate the changes at the long end of the curve. For instance, the recent rate hike at the Fed’s March meeting had varying impacts on the US Treasury yield curve.
The spread, or the difference between the yields of the ten-year US Treasury and the two-year US Treasury (BND), has fallen below 50 basis points for the first time since 2007. According to Investopedia, “A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates.” The most common yield curve traced by the investing and academic communities is the U.S. Treasury (GOVT) curve that plots the yields across various maturities. A normal yield curve is upward sloping, and long-term yields are higher than short-term yields.
The US Dollar Index started this week on a weaker note by declining to three-week low price levels on April 16. However, the US Dollar Index regained strength as the week progressed and gained for three consecutive trading days. The US Dollar started Friday on a stronger note and traded with strength at two-week high price levels in the early hours.
After a brief pullback last week, the US Dollar Index started this week on a weaker note by declining to three-week low price levels on Monday. On April 17, the US Dollar Index opened the day on a mixed note and traded above opening prices in the early hours.
US bond markets’ relief after a dovish FOMC statement was short lived as geopolitical tensions took center stage. US bond yields rose along the curve dominated by a sharp increase in yields at the short-end of the curve, which reignited fears of the yield curve flattening. The 2s10s spread has now reduced to 45 basis points and the 2s30s spread has been reduced to a fresh cycle low of 66 basis points.
In the recent weeks, the performance of the US bond markets (BND) has been influenced by trade conflicts between the US and other nations, primarily China (FXI), rather than the underlying economic performance. First, there were the steel and aluminum import tariffs, which were followed by $50 billion worth of tariffs on Chinese imports. The fear of a full-blown trade war reduced risk appetite and increased demand for safe-haven assets like bonds, which further pushed yields lower.
The US Dollar Index rose on April 12, 2018, and broke the four-day losing streak. With improved sentiment, the US Dollar Index started Friday on a stronger note and traded near open prices in the early hours.
The FOMC staff review indicated that US financial markets have been turbulent since the last meeting, which resulted in increased equity market volatility (VXX) and lower equity (VOO) asset prices. The reason cited for the increased equity market volatility was the surprising uptick in average hourly earnings in the January employment report, which made investors concerned about higher inflation and the interest rate increase. ...
Two measures of market volatility are sending very different signals. Tranquility has returned to Treasuries after fears of inflation rattled markets in early February, according to the Merrill Lynch Option Volatility Estimate Index, which uses options prices on government bonds to gauge expected turbulence.
As traders turn risk-off in response to escalating trade war tensions, investors have been diving into safety bets like Treasury bonds and related ETFs. A weekly data compilation by Bank of America Merrill ...
After all of the talk about tariffs, here are 3 updated price charts of the U.S. dollar showing trend and support/resistance.
During his keynote at the tenth conference organized by the International Research Forum on Monetary Policy in March 2018, Boston Federal Reserve president Eric Rosengren said that the United States has been lagging behind some European economies (VGK), which are building excess fiscal policy buffers by following austerity measures. Recently, the Trump administration has announced tax cuts for businesses and individuals and proposed increased spending, adding to the fiscal deficit. Total US debt has now surpassed $21 trillion and it is expected to increase further as the government deficit is likely to balloon in the months ahead.
Despite a valiant recovery attempt Friday, sellers remain a force to be reckoned with. That, it seems, is the message accompanying this morning’s market weakness. But while passive investors continue to pray for a better day, tactical traders are using the volatility to their advantage. Or at least they should be. The key to befriending volatility lies in fading the extremes.
A price chart analysis of the 20-year U.S. government bond ETF with a focus on the daily, weekly and monthly movements.
The US bond markets were relieved last week after the FOMC’s (Federal Open Market Committee) statement regarding its 0.25% rate hike sounded more dovish than expected. This forecast came as a relief to the bond markets, which had been reeling from fears about rising bond yields. The two-year bond yields declined for the first time in many months in response to the FOMC statement. The Vanguard Total Bond Market ETF (BND) ended the previous week at $79.52, depreciating by 0.01% for the week ended March 23.
Yahoo Finance's Jared Blikre and Alexis Christoforous break down the latest market action.