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How the Bond Markets React
A New Weekly Fixed Income Feature at the BlueCollarDollar
02.23.04

It didn't take long for the bond markets to react to the Federal Reserve Chairman Alan Greenspan's comments that the job market was improving. His belief that the labor market will improve sent the dollar higher forcing overseas banks such as the Bank of Japan to bulk up on bucks prior to any currency intervention.

What the previously weak dollar had done to the Treasuries, in particular, the ten year note, was send prices higher and that, as we all know, sends yields down. A strong dollar does exactly the opposite. By the end of the week, the ten year note's yield had climbed to 4.096%. This was a significant climb from the previous week's close of 4.04%.

Be careful investing in bond funds this week though as the indexes are adjusted in bond portfolios. This increased activity will not net you the best price. Even with that in mind, Treasury prices are not expected to climb or fall