Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. MARKETS
January 31, 2018 12:00 AM

Treasury market absorbs the most punishing January since 2009

Bloomberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Getty Images/iStockphoto

    The U.S. Treasury market is delivering investors a loss of historic proportions to start 2018.

    The Bloomberg Barclays U.S. Treasury index is down 1.42% this month through Jan. 30. It's on track for the worst start to a year since January 2009, when traders were bracing for a ramp-up in government borrowing to combat the recession. It would also be the biggest setback for any month since November 2016.

    Ten-year yields have surged about 33 basis points in January, reaching 2.74%, the highest level since 2014. Part of the spike came as traders anticipated more supply to accommodate a growing budget deficit and the Federal Reserve's move to shrink its balance sheet. The Treasury fulfilled those expectations Wednesday, announcing plans to boost auction sizes.

    "What we've been witnessing is a melt-up of Treasury yields," said Charles Ripley, investment strategist and fixed-income portfolio manager at Allianz Investment Management. "It's a supply story supported by fundamentals at home and abroad, at a time when the largest buyer is pulling back," he said, referring to the Fed.

    The U.S. central bank isn't alone in removing accommodation. The European Central Bank has reduced its monthly asset-purchase target and hasn't decided whether to extend buying after September.

    The sell-off has been driven primarily by expectations and sentiment rather than evidence of above-trend economic growth or higher inflation, said Kevin Flanagan, senior fixed-income strategist at WisdomTree Asset Management.

    "You're still not looking at any groundbreaking, fresh news developments" on the economic front, he said.

    And it remains to be seen whether the forces that have kept yields low — buyers of the spread between Treasury and eurozone yields and pension fund appetite for duration — will re-emerge as the 10-year approaches 3%, he said.

    In the view of Bank of America, bigger deficits and increased spending by companies will drive the next phase of the sell-off. For Goldman Sachs Group, the impetus for higher yields will come from global growth dynamics.

    The Bloomberg Barclays U.S. Treasury index lost 2.67% in November 2016 after Donald Trump's election victory unleashed a surge in inflation expectations. It tumbled 2.92% in January 2009, when yields were rebounding from their then-record lows set during the financial crisis.

    U.S. investment-grade corporate bonds have also suffered this month, with a Bloomberg Barclays index of high-quality company bonds falling 1.12%. U.S. junk bonds have done better, gaining 0.55%, while the S&P 500 returned 5.67% in the month through Jan. 30, once dividends are factored in.

    Related Articles
    Fed keeps rates steady, announces it will start reducing balance sheet in Octob…
    U.S. stocks gain on tax outlook as Treasuries drop
    U.S. Treasury 10-year yield rises to highest level since 2014
    Rate angst sends Dow down 670 points as bonds sink
    Jump in U.S. yields may not lure foreign cash, and here's why
    Fed nominee Marvin Goodfriend cleared for Senate vote
    Treasury 10-year yield tops 3% for first time since January 2014
    Recommended for You
    BankofJapan2022_i.jpg
    Global markets jolted as Bank of Japan surprises with yield policy change
    bank_of_england_blue_sky_1550-main_i.jpg
    LDI market requires 'urgent and robust' regulatory measures – BOE
    Nikhil Rathi
    FCA chief spotlights concerns over non-banks in U.K.
    The Institutional Investor's Guide to ESG Investing
    Sponsored Content: The Institutional Investor's Guide to ESG Investing

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    Show Me the Income: Discovering plan sponsor and participant preferences for cr…
    The Future of Infrastructure: Building a Better Tomorrow
    Outlook 2023: Opportunity in a volatile world
    Research for Institutional Money Management
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing