The U.S. Bond Market

The Senate voted on August 2 to raise the nation’s current $14.3 trillion debt ceiling for the 79th time since 1960. The government will also reduce spending by $2.4 trillion or more for bond investors.

Investors from New Zealand and Argentina have been buying American bonds in the $9.34 trillion market which has caused yields on 10-year notes to hit the lowest levels since November. The U.S government returned 1.83 percent last month, almost triple the amount of the rest of the global sovereign bond market. On August 2, the yield on benchmark 10-year notes fell as low as 2.67 percent (down from 3.014 percent in July).

For more information on the bond market, see Investors Make Fortune Betting On U.S. Treasuries, The Financial Advisor, Aug. 02, 2011.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.