Monday, February 18, 2013

A Final Fling for Treasurys?

The U.S. Treasury market's heyday of soaring prices is likely over, but some bond managers say there could be one more run, according to a WSJ report.

Treasury prices surged after the 2008 financial crisis, dragging yields to an all-time low of 1.4% at one point from more than 4%, as the Federal Reserve has bought trillions of dollars in Treasurys to help prop up the economy. But with the economy showing signs of life, a pullback in the central bank's bond purchases that could mark the end of the bull run is now a possibility.

Until the Fed stops purchasing, bond investors say, Treasurys have room for some short-term rallies. In the near term, an impending debate over U.S. government spending could be the trigger for gains.  U.S. Treasury prices fell last month as investors felt optimistic about the economy, pushing 10-year yields as high as 2.06%, from 1.75% at the start of the year. Bond yields rise when prices fall. The 10-year note yielded 2.009% late Friday….

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