U.S. Treasury ETFs gained ground Thursday, adding to what has
been a strong performance in recent weeks, as investors continue to
flock to the safety of U.S.-dollar linked debt as a way of
protecting themselves against the rising uncertainties surrounding
Europe's financial stability.
The wave of bond buying pushed yields on 10-year Treasurys to a
record low of 1.54 percent at one point Thursday. When bond prices
rise, yields go down, hence the strong price gains of many bond
Anxiety about the future of debt-gorged Greece has now spread to
renewed concern about Spanish banks and rising borrowing costs for
Italy, both of which are considered too big to save. Oil demand
risks falling in the worst-case scenario, and sagging oil and
commodities ETFs were a clear sign of investor concern.
Broad stock indexes, such as the Dow Jones industrial average,
have been sinking in recent weeks as well. The Dow closed 26.41
lower on Thursday at 12,393.45, and fell 6.2 percent in May, making
it the worst month for the index in two years, according to the
Wall Street Journal.
Rising Bond ETFs
The iShares Barclays 20+ Year Treasury Bond Fund (NYSEArca:TLT),
one of the bigger Treasury ETFs on the market today, and one that's
often benefited from flight-to-safety flows, was up 1 percent on
the day, and has now risen more than 9 percent in the past month
Other popular Treasury ETFs such as the iShares Barclays 7-10
Year Treasury Bond Fund (NYSEArca:IEF) and Pimco's 7-15 Year U.S.
Treasury Index Fund (NYSEArca:TENZ) also increased Thursday, with
their prices up by more than 3 percent in the past month.
Oil ETFs Sink
On the flip side, ETFs focused on oil and commodities in general
continued to move lower as investors appeared to be battening down
the hatches in fears that the eurozone debt crisis could be headed
for the brink.
The United States Oil Fund (NYSEArca:USO) was down 1 percent
Thursday after having shed more than 3.5 percent the day before
amid growing views that Europe's problems risked causing a much
broader slowdown in the global economy which, among other things,
implies slowing energy demand.
In the last month, USO has bled nearly 19 percent of its
The price of nearby crude futures on the New York Mercantile
Exchange has fallen more than 12 percent this year, including a
1.27 percent drop today that brought prices to $86.55 per
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