30-Year Treasuries Fall Most Since '04 as Demand Fades at Sale

[ShockediSay]

Source: Bloomberg Fin'l News

Feb. 7 (Bloomberg) -- Treasuries tumbled after the government's $9 billion auction of 30-year bonds at the lowest yields ever chased away investors.

The longest-maturity U.S. debt fell the most since 2004 as bondholders concluded that yields were too low given the Federal Reserve's determination to cut interest rates and keep the economy out of a recession. Before the government's sale, investors expected a 4.41 percent yield, based on pre-auction trading. The bonds were sold at 4.449 percent.

Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=anApWkUU0xDs&refer=news

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Foreign countries with a surplus own us like
subprime lenders own borrower's houses

The biggest tax increase was what the lobbyists
took out of our nation in the past 7+ years

[mother earth]

1. This must be shouted from the rooftops. No truer words...

"The biggest tax increase was what the lobbyists
took out of our nation in the past 7+ years"

[thunder rising]

2. Who'da thunk that bonds with no returns could not be sold. It's called due diligence by the buyer.

It's a bad risk.

[A HERETIC I AM]

3. ??

"Bonds with no returns"?

Um...they are US Treasury bonds that have a 5% coupon with a 4.44% yield. WTF do you mean "Bonds with no returns" ?

The reason the price went down is because buyers wanted a higher yield. OK, fine. The price of the bond falls closer to par.

Where is the "bad risk"? It has nothing to do with risk. It has to do with the market demanding a higher yield. A $1,000 Par, 30 year Treasury has been selling for more than $1,070 for months. The fact that the price of the bond has been bid down is not a reflection of risk, it is a result of demand for yield.

If you are looking to buy Treasuries this is a good thing. You make MORE on your investment. If you already own them, the value of the bonds has fallen but so what? The coupon rate hasn't changed. You're still getting $25.00 sent to you every six months for each bond you own. If investors that hold 30 year bonds don't like that fact that they have fallen in value they'll sell. Or they won't. The price could just as easily be bid back up to $1,100 in a month or two.

[FreeStateDemocrat]

4. What would it take for the price to go up to 1100 in a month with the Fed expected to cut rates?

[A HERETIC I AM]

6. Any number of things, all of them the old "Flight to quality"

When ever you hear the expression "Bonds rallied today" it means the price of bonds went up and as a consequence, yields fall. Treasuries are affected by supply and demand just like anything else. Investors saw better values elsewhere today. That could change with a single round fired off a Destroyer in the Straits of Hormuz tomorrow or another European bank revealing they have an asshole making trades for them.

Who knows.

[roamer65]

5. Junk bonds.