Treasurys drew $5.4 billion in weekly inflows, Bank of America data showed, as bond investors assessed whether elevated yields and fresh demand signaled a pause in this year’s selloff.
The Treasury flows were part of $12.1 billion added to the bond market overall, according to the bank’s data. CNBC reported that the 10-year Treasury yield came close to 5% Friday as oil prices climbed. CNBC also reported that $1.14 billion flowed into the iShares 20+ Year Treasury Bond ETF over the past month. The fund focuses on longer-maturity U.S. government debt and is a $47.3 billion fund.
Michael Hartnett, a Bank of America investment strategist, said in a client note that Treasurys had posted their poorest long-term performance in a century. In his weekly money-flow summary, he compared weak long-run bond returns with past stretches of poor performance in stocks and commodities that later became favorable entry points.
The 10-year yield’s Thursday drop totaled 0.19 percentage point, CNBC reported. Nicholas Colas, co-founder of DataTrek Research, described the move as three standard deviations and outside the 10-year Treasury’s expected daily trading range.
Colas wrote that the move did not reflect a sudden change in views of the U.S. economy. He interpreted market anxiety over funding artificial intelligence capital expenditures as a sign that the pace of new debt issuance could slow. With less corporate debt coming to market, he said, Treasurys would face less competition for investor capital.
CNBC reported that stocks and bonds both fell Friday as concerns about rising oil prices weighed on both markets, despite their usual tendency to move in opposite directions. Colas said history suggests the usual inverse relationship between stocks and bonds could return.
