Earlier this month, stocks had rallied as the European Central Bank and Federal Reserve announced bond-buying programs meant to jolt economic growth, with the Dow industrials hitting their highest level since December 2007.
But anxiety over the Federal Reserve's bond-buying program was the main culprit.
Others worry there could be a rebound in Treasury yields if the U.S. economy recovers and the Federal Reserve halts its bond-buying program earlier than expected.
Rising interest rates mean losses for holders of long-dated debt, and he says that if it were not for the Federal Reserve's bond-buying programme, US Treasury yields would be "higher, meaningfully higher".
But 4% is still a heckuva lot better than the 1.6% annualized real return bonds had the last time (1952-1962) we were stuck with historic low bond yields courtesy of Federal Reserve policy.
December gold rose steadily in August and September, first on expectations and then confirmation of more bond buying from the Federal Reserve referred to as the third round of quantitative easing and aimed at pushing push down long-term interest rates.
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But thanks to the Federal Reserve's aggressive bond-buying campaign, Treasurys also are priced near record highs.
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For more details, call the Federal Reserve's Savings Bond Unit at 800-245-2804 or visit the Web site, www.savingsbonds.gov.
Low inflation coupled with stagnant growth will, certainly, renew investor clamor for another round of bond-buying by the Federal Reserve.
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The continued slow speed of the economic recovery removes little doubt that the Federal Reserve will continue its bond-buying program (QE3).
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Edwards' chief bond strategist, predicts the Federal Reserve will raise short-term rates back up to 4%--or even 4.5%--over the next 18 months.
On Thursday, the U.S. dollar rose to an intraday high of 56.00 rupees, a level not seen since early September, due to fears that the U.S. Federal Reserve could lower its bond buybacks.
The dollar's rally had weighed on Asian currencies this year amid growing expectations that the U.S. Federal Reserve will pare its bond-buying program due to signs of recovery in the U.S. economy, reducing the attractiveness of high-yielding currencies.
Bond markets cheered the data hoping the Reserve Bank of India would continue lowering rates, adding to the three quarter-percentage-point cuts it made so far in 2013.
Gold demand in general has soared globally this year, as a result of the sovereign-debt crisis in Europe and the Federal Reserve's new round of bond buying.
Elsewhere in Asia, stocks in the Philippines tumbled in heavy selling as foreign funds unwound positions in anticipation of the U.S. Federal Reserve beginning to wind down its bond-buying program.
Bond markets were savaged in 1994 when the Federal Reserve started to raise rates from 3%.
To increase the base money supply, the Federal Reserve typically buys something, usually a bond of some sort.
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Expect the Federal Reserve Board to reinstitute its program of bond repurchasing, thereby driving down interest rates on long duration Treasuries.
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Sotirios Keros, a 39-year-old pediatric neurologist in New York, says he plans to shift his emergency reserve to a long-term municipal bond fund when his CDs mature this summer.
The bond crowd just pushed out its forecast for changes in Federal Reserve Board policy emphasis from yearend 2011 to yearend 2012.
At the same time, she added, investors remain concerned about the Federal Reserve and its commitment to stimulating the economy with bond purchases.
When the Federal Reserve Open Market Committee met in June, more bond purchases to push down long-term Treasury and mortgage rates were already on the table.
Keep in mind that a debt reserve fund is usually created at the time of bond issuance, hence, interest payments out of reserves is nothing more than giving the bondholder back his own money.
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The re-election of President Obama means a greater likelihood of continuity in U.S. Federal Reserve monetary policy, including a continuation of the bond-buying program known as quantitative easing, said Anne-Laure Tremblay, precious-metals strategist at BNP Paribas.
The Federal Reserve Bank will extend its Operation Twist program, a bond buying program that forces interest rates to historic lows and weakens the value of the dollar.
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The next year the bond market roared back to life with a boost from the Federal Reserve, which allowed firms marred by bad capital structures to refinance billions in debt maturing by 2014 that was otherwise facing restructuring.
This, in concert with the Federal Reserve in the United States jacking short-term rates above bond yields and home owners unable to extract equity from their homes they way they have in past years, does not have a salutary effect on the U.S. or world economy.
But that's partly due to the Federal Reserve's policy of maintaining historically low interest rates through its bond-buying program, he thinks.
The local currency hit a 10-month low and bond prices fell to their lowest in two weeks as markets were expecting the Reserve Bank of India to cut its policy lending rate at its June 17 meeting to help boost economic growth that has slowed to its weakest pace in a decade.
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