This year's decline in the U.S. dollar is drawing investors back into a practice that they had eschewed for some years: Borrowing the greenback to buy riskier assets in what is known as a carry trade. A number of investors are pursuing higher returns by buying overseas assets. Investment firm Ashmore Group, for instance, sold the dollar to add local-currency government bonds from Mexico, Indonesia and Brazil to its portfolios, according to Jan Dehn, head of research.
U.S. government-bond yields edged lower Thursday after mixed data on jobs and housing signaled an erratic economic rebound. The yield on the benchmark 10- year Treasury note recently traded at 0.668%, according to Tradeweb, down from 0.676% at Wednesday's close. Yields fall as bond prices rise.
The Federal Reserve's March commitment to deploy billions of dollars to prop up the economy was a boon for the company the Fed hired to help execute its plan: BlackRock Inc. (BLK), the world's largest asset manager. In response to the pandemic-induced market collapse, the Fed promised to buy corporate bonds and exchange-traded funds that invest in collections of corporate debt. The Fed had never bought ETFs or corporate bonds before.
Lawmakers clashed at a congressional hearing Thursday over whether the Federal Reserve has done enough to backstop municipal finances. State and local governments are facing historic budget shortfalls due to the coronavirus, and Congress has deadlocked over the prospect of additional federal aid. But those governments have largely regained their ability to borrow in private markets.
The Dow Jones Industrial Average eked out a fourth-straight gain Wednesday after the Federal Reserve signaled it was ready to keep interest rates near zero for three more years and unpin the economy even in the face of inflation. Still, stocks lost some of their steam in the last hour of trading. The Dow finished up 36.78 points, or 0.1%, at 28032.38 after trading up more than 360 points following the central bank's announcement.
U.S. stocks gains slipped away Wednesday despite the Federal Reserve signaling it was ready to keep interest rates near zero for three more years and unpin the economy even in the face of inflation. The S&P 500 fell 0.5% as of the 4 p.m. close of trading in New York, while the Dow Jones Industrial Average added 38 points, or 0.1%, staying relatively stable after the central bank's release. Both broad indexes were aiming for their fourth-straight session of gains.
U.S. stocks remained higher Wednesday as the Federal Reserve signaled it was ready to keep interest rates near zero for three more years and unpin the economy even in the face of inflation. The S&P 500 rose 0.3% and the Dow Jones Industrial Average rose 200 points, or 0.7%, staying relatively stable after the central bank's release. Both broad indexes are aiming for their fourth-straight session of gains.
The European Central Bank is vacuuming up sovereign bonds faster than governments can pump them out, keeping a tight lid on borrowing costs as the region spends on coronavirus relief measures. The strong appetite from the ECB has kept yields on government debt in the region pinned extremely low. On Friday, yields on benchmark 10- year German bunds edged down to minus 0.484% from minus 0.427% on Thursday.
The European Central Bank is vacuuming up sovereign bonds faster than governments can pump them out, keeping a tight lid on borrowing costs as the region spends on coronavirus relief measures. The strong appetite from the ECB has kept yields on government debt in the region pinned extremely low. On Friday, yields on benchmark 10- year German bunds edged down to minus 0.467% from minus 0.427% on Thursday.
The yield on the benchmark 10- year Treasury notched its largest single-day decline in a month after a steep fall in technology stocks pushed investors to the safety of government bonds. The yield on the benchmark 10- year note closed at 0.682%, down from 0.720% Friday-- its largest single-session decline since Aug. 4. The yield on the 30- year-bond also slid, settling at 1.421%, from 1.468% last week. Yields fall when bond prices rise.
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