Bond rally: The bond market is freaking out. Here is what matters

admin May 30, 2019

6 1 minute read

Bond rally: The bond market is freaking out. Here is what matters

The return on the benchmark 10-year US Treasury is now only 2.22% – the lowest level since September 2017. The dividends fall as investors buy more bonds, as they usually do at times of economic disadvantage. It is a so-called plane for safety.

This current rush of bonds seems to be because investors are afraid of a drawn trade war between the United States and China.

"Bonds rally as a sanctuary, and draws lower results as investors have been over told US and Chinese trade negotiations. The sentiment is getting worse as trade tensions between the two forces do not show relief," said Jasper Lawler, London's Research Director Capital Group, in a report

The yield on the 3-month US bond is currently higher than 1[ads1]0 years, which fluctuates around 2.35%, which is another reason for concern, when short-term interest rates are higher than long-term yielder

"When the yield curve is reversed, it is not time to borrow money to take a vacation to Orlando.

" It usually happens before a recession. It's time to save, to build a pillow, "said Campbell Harvey, financial officer at Duke University and partner and senior advisor at Investing Company Research Affiliates, in a video interview for Research Affiliates.

The yield curve inverted once before this year, in March, but before that, the yield curve had not reversed since 2007 – Just before the start of the big recession.

Should investors be concerned about another dramatic decline like that? Not quite yet.

For one, US consumers are still using. Leading dealers like Amazon ( AMZN ) Walmart ( WMT ) and ( TGT ) have done well for the threat of higher prices for some goods because of the fare. Consumer confidence remains high.