, Columnist
The Treasury Market Has a Big Chicken-and-Egg Problem
Which came first: record demand for long duration or bond yields at multiyear highs?
The age-old question.
Photographer: Fox Photos/Hulton Archive/Getty Images
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The world’s biggest bond market faces a conundrum. Figuring out the answer could guide traders for the rest of the year and into 2019.
The market for principal- and interest-only U.S. Treasury securities, known as Strips, rose by a record $12.2 billion in October, according to data released Tuesday. These zero-coupon bonds are favorites of defined-benefit pension funds and other asset-liability managers because their long duration characteristics align with their obligations. Indeed, almost all the stripping was done on debt due in roughly 30 years.