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Some investors add Treasurys after 10-year yield nears 5%
CNBC reports Bank of America and DataTrek say some investors are buying U.S. Treasurys after a year of losses, even as the 10-year yield hovered near 5% on Friday.
- New headline Was: “Investors are starting to find opportunities in the battered bond market”
- Our desk filed its story
Some investors are putting money into U.S. Treasurys after a year of losses, even as the 10-year yield hovered near 5% on Friday, CNBC reported1.
The 10-year note spent Friday near that level as oil prices rose and a consumer survey showed inflation expectations remaining well above the Federal Reserve's 2% goal, according to CNBC1. The outlet said bonds have been hit this year by worries about prices, Middle East tensions and debt issuance from companies spending heavily on artificial intelligence1.
Bank of America investment strategist Michael Hartnett, in a client note cited by CNBC, said a secular contrarian trade would be adding bonds after what he described as the worst long-run Treasury return in 100 years1. BofA data compiled in that report showed $5.4 billion of Treasury inflows over the past week, part of $12.1 billion into the bond market, and $1.14 billion into the iShares 20+ Year Treasury Bond ETF over the past month1.
Thursday's session saw the 10-year yield fall 19 basis points, a move DataTrek Research co-founder Nicholas Colas called a 3-standard-deviation swing that was not driven by a sudden change in views on the U.S. economy, CNBC said1. Colas wrote that the Treasury market was treating equity and corporate-debt concern about AI-related capital spending as a sign that incremental issuance would slow, reducing competition for Treasurys1.
CNBC said Friday's stock decline coincided with another bond sell-off, driven largely by oil-price fears, reversing the usual inverse stock-bond pattern1. Colas said history suggests that mix can still be a reasonable approach and that Thursday was a step toward cooling higher rates1. Whether yields have peaked was not established in the report1.
