T-notes tumble, job outlook bleak in US
US: The release of weaker than expected economic figures has
damaged the US Treasury market to such an extent that the key 10-year
notes yield has decreased and led to investors expecting a further
plunge.
For the first time in six months, the yield on the benchmark 10-year
Treasury note, fell to 2.97 percent, while the 30-year bond dropped to
4.15 percent. And as new jobs and manufacturing data released show deep
weaknesses in the US economy, evidence for the economic recovery is now
losing ground.
This means trouble for investors betting on stocks and commodities,
or other high-risk assets, Reuters reported.
“The sharp decline… will only add to fears that the economy has hit
another soft patch,” Capital Economics analyst Paul Ashworth said. This
will come as a disappointment to the large number of unemployed in the
US who were hoping the economic recovery would lead to an increase in
job opportunities.
“It does look like we have a pretty weak rebound, even weaker than we
had considered,” Jason Brady, a managing director for Thornburg
Investment Management said. Previously, investors had expected yields to
increase. But with the weak and troubled housing and labor market,
never-ending debt issues in Europe, and damage to the Japanese economy
after the Fukushima earthquake, many are now beginning to change their
minds.
“The economy, society and government are fueled by debt,” DoubleLine
Capital chief executive Jeffrey Gundlach said.
It cannot be successfully managed while interest rates are rising, he
added. Thursday, Press TV |