The market has spoken on bond yields

Trader on the floor of the New York Stock Exchange.
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Trader on the floor of the New York Stock Exchange.

Another day of LOWS: low oil, low euro, and low bond yields. German bund yields fell 15 percent to 0.44 percent! Wow!

Why take an 0.44 percent yield when you can get roughly two percent with the U.S. 10-year Treasury? And that's what happened. Investors flocked to U.S. bonds of all types, except short-term.

A large swath of the ETF bond universe is sitting at a 52 week high. This includes:

Intermediate-Term Treasuries (IEF)

Long-Term Treasuries: iShares 20+ Treasury Bonds (TLT)

Mortgage bonds: iShares GNMA (GNMA)

Investment-Grade Corporates: iShares Investment Grade Corporates (LQD)

Long-Term Corporates: Vanguard Long-Term Corporate (VCLT)

The iShares Muni Bond ETF (MUB), the largest of the municipal bond ETFs, is not far from a new high (it hit highs back in October).

The market has spoken: a large group of traders are of the opinion that long-term U.S. Treasury yields are not going to go anywhere fast. This means extend duration, and if you don't like Treasuries go into longer term corporates to pick up a little extra yield.

Even interest-rate sensitive equities rose: Utiltities, Telecom, and REITS all were up.

The laggard, of course, has been high yield, with the iShares High Yield Corporate ETF (HYG) down another 0.4 percent today.


  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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