Amid the never-ending weekly all-time highs in US equity markets, the US treasury markets are seeing a voracious growth. Yields continue to plunge, and the 10-year note yield fell to a 10-month low to 2.44 percent. The 30-year bond fell to an 11-month low of 3.29 percent earlier this morning. Demand was seen along the entire yield curve.
Much of the demand has been contributed to traders overly bearish on treasuries coming into 2014. Traders were shorting the bond market believing that yields would begin to rise, but the Federal Reserve stomped that thesis quickly. Positions were being squeezed, and traders had to reverse course and follow the trend. “I don’t think people who are buying here really want to. They’re buying because they’re being forced in,” said Brian Edmonds, head of interest rate trading at Cantor Fitzgerald.
European debt markets saw demand, as well. The German 10-year bund fell to a low of 1.34 percent. Poor economic data out of Germany sparked bond buying. German unemployment rose by 24,000 and import prices contracted .3 percent. Market participants will be looking for the eurozone unemployment data following the European Central Bank (ECB) meeting on June 5.