U.S. Treasury yields continued to tumble last week as fears of a global economic slowdown caused a rush to buy Treasury bonds. 30-year yields dropped to all-time lows and at one point, traded below 2%. With $15 trillion in negative-yielding bonds globally, U.S. yields still look relatively attractive.
In the week ahead, two events will receive significant attention. The minutes from the Federal Reserve’s (Fed) last meeting will be released Wednesday. Details of the internal discussion leading up to the first rate cut in a decade will be scrutinized for clues about a potential rate decrease in September. Later in the week, the Kansas City Fed hosts central bankers from around the globe in Jackson Hole, Wyoming, for its annual symposium. The potential exists to hear more about nontraditional monetary policy ideas, given the current state of the global economy.
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High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.
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