Mar 26, 2020 - Economy & Business

Bond market returns to normalcy, traders ignore stock gains

Illustration of money multiplying and getting larger
Illustration: Rebecca Zisser/Axios

The Treasury market is getting back to normal after the Fed's massive bond-buying announcement earlier this week.

What to watch: Yields on Treasury bills were negative out to three months, closing in the red late Wednesday, as traders continued to favor paying to loan the government money over buying longer-dated bonds.

  • The Fed's QE program and investor pessimism kept Treasury prices rising and yields falling despite hearty gains for U.S., European and Asian stocks.

Major key: Treasuries have seen a significant decline in the bid-ask spread on prices for notes and bonds since the Fed took action.

  • "The bid-ask spread on benchmark U.S. 10-year Treasury notes had widened as much as 200 basis points on March 20, but narrowed to within a range of six basis points or less on Wednesday, according to Refinitiv data," Reuters' Gertrude Chavez-Dreyfuss and Ross Kerber noted.
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