MARKETWATCH: July 26-30
The week saw ups and downs of interest in Treasury debt instruments on the margin. Foreign interest backed off a little as perceptions of risk: return trade-offs shifted, like a yo-yo. The week ended with Treasury yields near record or recent lows, a positive sign of strong demand. Debt remains cheap – for now.
As traders wrapped up for the month and the weekend, they turned their focus back to Treasury debt instruments. As a result, demand for the benchmark 10-year note rose as of Friday morning. Safe haven effects appeared to have kicked in again, as higher demand reflected weaker than expected
But markets can shift quickly – at least at the margin. In contrast to today’s interest, yesterday’s Treasury auctions (the end of this week’s $104 billion government note auction) were considered disappointing. Reports blamed tepid interest from foreign central banks and investors, possibly due to low interest rates, which did not provide sufficient return. Foreign interest is not considered to have shifted in a fundamental way.