Recently there’s a been a lot of curiosity about the strong second quarter turned in by the bond market. Tom discusses two theories that may explain the bond market’s second quarter. These are, of course, just theories because nobody ever discloses their personal reasons for buying or selling securities.
The first theory that we’ve been hearing to explain the strength in bonds during the second quarter has to do with the lackluster first quarter GDP numbers. When an economy shows weakness many investors believe bonds are supposed to be less volatile and safe.
Another theory is that we’ve seen some foreign money flow into US bonds. The European Central Bank has implemented negative interest rates. Meaning that if you leave money on deposit at a bank, you’re actually losing money. Even with rates low here in the US, they are seen as favorable to foreign investors dealing with negative interest rates.
These are just two theories going around right now. Make sure to watch this week’s video to learn more!