Despite rock bottom interest rates and record high bond prices, demand for US Treasuries has yet to subside
Despite rock bottom interest rates and record high bond prices, demand for US Treasuries has yet to subside. According to Bloomberg, investors have submitted $3.4 trillion worth of bids for the $1.1 trillion worth of bonds and notes sold this year so far. The bid-to-cover ratio of 3.06 is the second highest on record. The sky-high demand for US bonds comes from many sources. At least part of it is due to Dodd-Frank regulations that banks hold more high-quality assets. Another driver of bond demand is the relatively high amount of risk coming from geopolitical hot spots across the globe. What's more, the global economy continues to grow at a slow enough pace to keep the world's central banks from pulling back on their easy money policies. Keep in mind, despite all of this, US equities are also setting record highs. (VIEW LINK)
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