Financial Technology

Financial Technology

April 09, 2012

Treasury yields fall along with stock market

Treasury yields are falling for the fourth day in a row as investors continued to digest Friday's disappointing jobs report.

The yield on the benchmark 10–year Treasury note fell to 2.04 percent Monday from 2.06 percent Friday. That means people who put buy the notes will get less income from their investment.

The price of the note, which moves in the opposite direction of the yield, rose 12.5 cents for every $100 invested.

Investors tend to buy Treasurys, which are considered to be among the safest investments, when they're nervous about the economy.

The stock market had its worst week of the year last week, and major indexes were all down sharply on Monday. The decline was largely a reaction to the government's report that the U.S. added just 120,000 jobs in March, about half the pace of the previous three months. The report was released Friday but the stock market was closed for the Good Friday holiday.

The stock market decline of the past few days is also related to the Federal Reserve's hints that it will not buy more bonds, a way of pumping money into the economy. By buying bonds, the Fed increases demand for them, lowering their yield, which in turn persuades investors to put their money into riskier investments like stocks.

Some investors wondered if Friday's ugly jobs report would persuade the Fed to change its mind and buy more bonds. That belief could pre–emptively push bond yields down. But Chip Cobb, senior vice president of Bryn Mawr Trust Asset Management, said he didn't think that was the case.

"It was a soft number, not a horrific number," Cobb said of Friday's jobs report. "It's not a Fed conversation yet."

In other bond trading, the yield on the 30–year bond fell to 3.18 percent from 3.22 percent Friday. Its price jumped 59.4 cents per $100 invested. The yield on the two–year note fell to 0.31 percent from 0.32 percent.

The yield on the three–month T–bill was 0.08 percent.


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