Bond market moves raise fears of growing bets against America
Treasury yields have been behaving unusually, sparking concerns that the typical “safe haven” investment might be losing some of its shine.
Government bonds have been selling off while stocks have plunged. That’s unusual, and it’s raising concerns that global investors are losing some of their long-standing confidence in America.
Stocks are generally seen as a risky type of asset, while bonds are known as a “safe haven,” with the two typically moving in opposite directions. That’s because government bonds — a type of security sold to help finance expenditures, to be paid back to buyers with interest over a set period — are backed by the full faith and credit of the United States.
The same can’t be said for publicly traded companies and their share prices. So when stock markets are booming and investors are excited to bet on the performance of American businesses, demand for lower-risk bonds dries up. During times of turbulence, the reverse usually happens.
We don’t know exactly why bonds are gyrating so much.
Barclays Analyst Ajay Rajadhyaksha
Rating: 5