Global economic problems cause bond prices to rise

Global economic problems cause bond prices to rise

A look at the bond market again after two consecutive posts on James Bond

The Chinese trade data that was forecasted turned out to be weaker than expected and has brought about fears for the global economic outlook. Additionally, the Treasury had its quarterly refunding where $72 billion in coupon-bearing securities were auctioned off.

More investors are buying U.S. government debt possibly as a response to the economic problems in Europe. The debt crisis in Europe is still an ongoing issue and now there is talk of Italy and Spain needing large financial bailouts. Even Germany is predicted to go into a recession in 2012.

The July jobs report was favorable for the U.S. economy, but it is not enough. Many economists expect the Federal Reserve to step in to help in encouraging growth. Treasury yields have kept creeping up, but analysts have reaffirmed there will be a cap at the two percent mark.

With the Standard and Poor’s downgrade, it was expected that U.S. Treasury yields would no longer be at those low levels that we are accustomed to. But this has definitely not been the case and the stock market still seems to be the best place for U.S. investors.

The bond prices went up after some losses earlier on in the week. Still, they have been moving around the 1.50 – 1.90 percent range. I guess the U.S. bond market will continue to serve as a safe investment for your money when the rest of the globe is in economic crisis especially with the slow growth that was recorded in the Chinese economy.