Treasury ETFs May 2013

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Treasury ETFs May 2013 2017-03-03T15:27:05+00:00
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  • STEPHEN
    Member
    Post count: 22

    Would someone explain to me or provide a link to an explanation for the decline in treasury ETFs that lasted for several months beginning in May 2013?

  • STEPHEN
    Member
    Post count: 22

    I don’t see a way to edit my post, so I will reply to it.

    Upon further research I found that May 2013 was when the Federal Reserve began to openly discuss quantitative easing.

  • Vangelis
    Moderator
    Post count: 154

    Hi Stephen,

    May 2013 was perhaps the worst blood bath in bonds of the last 5 years, and it lasted for months.

    It was driven by a misread of Fed intentions, and the market aggressively pricing in several rate hikes. Eventually, like ever other time since 2009, the market realized the Fed was not ready to move, and, international demand for bonds continued to grow, so bonds recovered, hit new highs and had a fantastic 2014.

    Remember, virtually every big Wall Street firm and 95% of forecasts, and the Fed, have been building in rising rates – always about 1 year away. They have all been wrong the entire time. Eventually, rates should rise, but obviously the market can’t seem for forecast when very well. One last analytic opinion – historically the Fed has a really hard time moving rates when the market wants to go a different direction. 99% of what you see on TV about that misreads how the market sets rates — it is simply money flow.

    • STEPHEN
      Member
      Post count: 22

      Thank you for that explanation.

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