Daily Management Review

US bond yields hit the highest value in a month


Many investors chose to get rid of long-term US government bonds, which is why their yield reached its maximum values in more than a month.

The yield on long-term US government bonds reached its highest level in more than a month, according to The Wall Street Journal. The yield on 10-year bonds rose to 0.68% from 0.535% on August 6. The yield on 30-year bonds peaked since early July, the newspaper writes.

The sharp rise in yields means a significant reversal in the bond market, as at the end of last week the 10-year bonds were at near-record lows. The Fed's signals were difficult for some investors to read, and the drop in yields shows they are worried about the economic outlook, even as stock markets continue to rally after the sharp collapse in March, the newspaper said.

The rise in bond yields can be explained by the fact that investors began to get rid of bonds, notes WSJ. Dealers have cut some of their investments in securities, and fund managers have freed up space in their portfolios in anticipation of a new wave of bond supply. Another reason for the growth may be the summer holidays in Europe and the USA, due to which the trading volumes in general decreased.

source: wsj.com