Jittery investors gobbled up Treasury notes last week, sending their value down to historic lows.

 

Unlike stocks and commodities, Treasury bonds’ value goes down when demand is high. The rush last week sent Treasuries with 10- and 30-year yields to all-time lows, with 10-year notes reaching a level not seen since November 1945, dipping below 1.5% for the first time ever. The rate peaked in September 1981 at 15.84% and was still above 9% as recently as September 1990. It last topped 6% in July 2000.

 

Thirty-year bonds fell to below 2.51%, the lowest rate since records began in 1953.

 

A perfect-storm of bad news prompted traders to buy Treasuries, which are considered a safe place to store money when economic uncertainties surface. In the U.S., the federal government released job figures for May that showed the economy produced fewer employment opportunities than was forecast.

 

In addition, the news out of Europe wasn’t much better, where people in Spain withdrew billions in deposits out of their banks and prompted fears of a bank run.

-Noel Brinkerhoff

 

Treasury Yields Tumble to Records on Jobs Data, Europe (by Cordell Eddings and Susanne Walker, Bloomberg News)

Market Fears Send Key Interest Rate To 66-Year Low (by Matthew Craft, Associated Press)