30-Year Treasury Bond Yield Suffers From High Volatility

So far this month, bonds have bounced up and down like a yo-yo.

Between last Monday and Wednesday, yields on the 30-Year Treasury Bond moved sharply higher, past 3.1%.

On news that Greece’s debt reckoning has been delayed until the end of the month, yields on the Treasury dropped, falling below 3.05%.

Then, after Friday’s jobs report, higher again. And today, yet another spike higher. See for yourself…

30 Year Treasury Bond Yield June 1-9 2015

The news out of Europe is that Greece has deferred payment until June 30.

Instead of paying €300 million last Friday, they’ve decided to bundle all of June’s four payments into a total of €1.6 billion due at the end of the month. I doubt they’ll be able to pay that heftier sum, so I think it’s safe to say the country has pretty much defaulted!

On the employment front, the Bureau of Labor Statistics (BLS) report beat expectations, making the odds of a rate hike more likely.

Non-farm payrolls increased by 280,000, when 220,000 was the expected figure. The participation rate increased to 62.9%, when it was expected to decrease to 62.7%. Finally, hourly earnings moved higher by 0.3%, 0.1% higher than expected. The only negative was the unemployment rate which increased to 5.5%, but even that was due to an increase in the participation rate.

With the Fed meeting beginning a week from today, I believe we’ll see continued volatility up until then. The likelihood of a rate hike is now higher given the positive wage growth and apparent stability in prices, seen in both producer and consumer prices last month.

I still believe a rate hike will happen sooner than later. Harry believes we won’t see a rate hike until much later in the year, if at all in 2015. Our shared opinion of the economy’s health does suggest the Fed can’t and even shouldn’t raise rates — I simply think they’ve backed themselves into a corner, and that at this point, they have no choice.

Time will tell.

Lance Gaitan

Lance Gaitan

Editor, Dent Digest Trader

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Categories: Bonds

About Author

Lance Gaitan graduated from Franklin University in Columbus, OH with a degree in Finance. After graduating and working as an auditor for an insurance administrator as a number of years, he attained his securities license. He then went to work as a broker for a small firm and during the mid-1990’s Lance managed the futures trading desk for Piper Jaffray, a large regional brokerage firm based in Minneapolis. After migrating to Florida in early 2000, Lance founded a futures trading firm, GSV Futures, specializing in retail commodity trading strategies. Lance sold that business in 2006 and joined Harry Dent, Jr. and Rodney Johnson at Dent Research shortly thereafter.