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Written by admin on September 17th, 2009

Treasuries on Rise

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Treasury notes have been increasing, with short-term maturity debt taking the lead in a recent flurry of investor buy outs that added up to $109 billion in notes.

This record-tying purchase came about even though there is widespread skepticism about the strength of the American economic recovery as well as the value of higher-yielding assets.

The yields on two, five, and seven-year notes dropped even as demand increased at recent securities auctions. The group of investors included a part of foreign central banks. In a report due on September 4, the economy has a 9.5% unemployment rate and jobs have been lost for the twentieth month in a row.

If you were to look at the how the bond market is functioning now, you may get a glimpse of how long and slow the economic recovery process will be. Yields continue to reflect that the market is expecting continued low interest rates, and those for the near future. This is a good indicator of a slow recovery.

While they’ve changed, some of the most recent figures show two-year note yields declined by seven basis points to 1.02 percent. Back on August 21, the number was 1.09%. Similarly, five-year note yields fell twelve basis points to 2.45%, and seven-year securities fell twelve basis points to 3.09%.

Despite fluctuations in stocks, bonds have continued to benefit during the week. There are concerns that the 52% increase in the S&P 500 since March 9 is based on potential corporate profits and economic growth.

Sales in two-year notes back on August 25, reached $42 billion, with $39 billion in debt expected to mature in five years on August 26. There are also $28 billion in seven-year securities for the 27th.

Investors, including several foreign central banks, purchased 49.4% of the notes at a recent two-year auction. About 33% of the securities from July were purchased also, which was the least amount purchased since April. Investors also bought 56.4% of the five-year notes, compared with 36.7% back in July.

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4. US Dollar Experienced Increases By Sales On Bonds
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