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Yields on Treasuries Drop Treasury yields moved slightly lower yesterday after volatility in the equity markets sent investors fleeing to the relative safety of government securities.
Since much borrowing is ultimately benchmarked against the yield on Treasuries, if the Fed purchases Treasury debt, it should make borrowing easier throughout the economy.
Mr. Rivelle advised those who own Treasury bonds, or mutual funds that focus on Treasuries, to diversify fixed-income portfolios with some investment-grade corporate bonds.
There are no "cross-default" provisions on Treasuries, which means that missing a payment on one does not automatically place the others in default.
"There is no scenario I envision where the secretary of the Treasury would elect to stop making principal and interest payments on Treasuries," he said.
(Remember that Treasury interest is exempt from state tax while capital gains on Treasuries are usually subject to state tax).
Adding to the squeeze on Treasuries is the declining total of maturing government debt, simply because the Treasury issued less as deficits shrank and surpluses grew.
And it had an impact on Treasuries".
But they appear adequately insulated from any losses on Treasuries.
Two-year yields on Treasuries swung lower to a paltry 0.19 percent.
Yields on Treasuries rose almost immediately, as traders priced in future rate-rises.
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