Jim Caron Tony Crescenzi Scot Johnson Don Ellenberger

来源: marketreflections 于 2010-07-04 08:32:38 [档案] [博客] [旧帖] [给我悄悄话] 阅读数 : (6793 bytes)

回答: Peter Morici, an economist 由 marketreflections 于 2010-01-28 07:23:01

NEW YORK (MarketWatch) -- The recent steep rally in U.S. Treasury bonds, helped by investor jitters over European debt and weakening U.S. economic data, isn't likely to last, say some bond investors and strategists.

They expect longer-term rates to rise in coming months as investors pull back from bonds -- whose prices rise when their yields fall -- because growth turns out to be better than markets anticipate. This shift should support the stock market.

Short-term Treasury yields dropped to a new record low in recent sessions as bad news piled up about consumer confidence, manufacturing and the job market. In the six months ended Wednesday, an index of Treasury debt had the biggest half-year gains since 1995.

And with investors leaning toward longer-duration Treasurys, the yield curve flattened; in severe cases, the shrinking between short and long-term yields has been a harbinger of recession.

/quotes/comstock/31*!ust10y
UST10Y 2.98, 0.00, 0.00%

4.504.003.503.002.50JASON10FMAMJThese moves cast an additional worry over the U.S. economic outlook. Many strategists look at U.S. government bonds as a much larger, alternative forecaster for the economy and markets.

As Treasurys picked up steam, the S&P 500 Index /quotes/comstock/21z!i1:inx (SPX 1,023, -4.79, -0.47%) lost more than 16% from its April highs to levels not seen since September.

Some strategists, however, are betting that these clouds will clear in the second half, and that yields are on their way back up.

"Staying in safe haven assets right now might feel like the best thing to do, but that's wrong," said Jim Caron, head of global interest-rate strategy at Morgan Stanley. "The second half of the year is going to surprise most people as we get the growth that will lead to higher yields."

"Ultimately, we think equity markets do come back and rally," he said.

Short-term yields, however, are likely to stay low in the coming months, pinned down as the Federal Reserve keeps its target interest rates at record lows to ensure the economy gets the fuel it needs from lower borrowing costs.

That shift -- higher long-term yields but still-low short-term yields -- would be a positive signal for the flagging stock market, analysts say.

The worry trade
Since April, U.S. Treasurys have been some of the few investments to chock up gains.

As prices rallied, yields on 10-year Treasury notes /quotes/comstock/31*!ust10y (UST10Y 2.98, 0.00, 0.00%) fell to the lowest level since April 2009 on Wednesday and traded at 2.98% Friday. The securities serve as a benchmark for a wide variety of corporate and consumer loans, including mortgages.

The drop in yields came as worries mounted about some European countries being able to finance their large deficits. Ten-year yields are down from 4% and 2-year yields /quotes/comstock/31*!ust2yr (UST2YR 0.63, 0.00, 0.00%) have dropped from 1.18% in April.

Besides the European Central Bank offering support and the creation of a rescue mechanism by euro-zone countries to buoy the shared currency, many countries slashed budgets and took other steps towards fiscal austerity. These measures, while encouraged by many economists, tend to lead to slower growth and a longer recovery in the short-term.

Investors priced in that slower growth by shifting assets into Treasurys, where many had been very underweight, and out of riskier assets including corporate bonds and stocks, Caron said.

Besides the holders of government bonds, borrowers have benefited too.

Low 10-year yields have also pushed mortgages to the lowest in decades, providing some support to the housing market. See more on mortgage rates.

"The main benefit of the decline in market interest rates will be through the mortgage refinancing channel, as well as through corporate borrowing," said Tony Crescenzi, a strategist and portfolio manager at Pimco.

Plenty of uncertainty remains, especially surrounding fiscal issues in Europe and what that ultimately means for investors confidence and the global economy, said Scot Johnson, senior client portfolio manager for Invesco Fixed Income.

U.S. economic data has been less positive, including Friday's monthly labor report which showed private employers added fewer jobs in June than economists had predicted. Read about U.S. jobs data.

"Yields are not going to rise dramatically from here," Johnson said. "The data has disappointed on the downside but it's certainly not catastrophic."

But for strategists like Morgan Stanley's Caron, some of the drivers for the recent Treasury rally have been disappearing.

As investors turn their focus to the next quarter, they're likely to notice that a lot of the perceived problems of the second quarter have dissipated, he noted

European countries that needed to refinance debt have been able to do so recent months. Overnight lending rates between banks have stabilized. China revalued its currency and Congress passed a financial-reform package, eliminating those sources of uncertainty that tend to favor shifts into Treasury bonds.

Yield curve
Another bond-market metric watched by analysts, the slope of the yield curve, also bears the marks of the past months' turbulent financial markets.

The gap between short- and long-term yields has shrunk as investors sought the relative safety of government debt but a higher yield than short-term debt offered. A flatter yield curve -- it can even invert if shorter-term yields are higher than longer-term ones -- tends to be a good predictor of a recession.

"The flattening of the yield curve has been the worst kind," wrote Crescenzi this week. "The curve has flattened because investors have become less optimistic about the outlook for both the U.S. and global economy."

However, it could be worse.

The gap between 2-year and 10-year yields has shrunk to about 2.37 percentage points, down from a high of 2.93 points in February. But the current level is still well above the average gap since 1998, around 1.25 points, says Don Ellenberger, portfolio manager at Federated Investors.

These levels indicate that the outlook isn't so bad.

A relatively wide gap tends to be a good sign for the economy because solid growth tends to spur inflation, pushing investors to demand higher yields on longer-dated debt.

"Eventually it will become more clear to the market that we're going to avoid a double dip, which will cause interest rates in general to rise," Ellenberger said.

Deborah Levine is a MarketWatch reporter, based in New York.