Friday 24 October 2008

Why is US 30-year treasury bond price important?

Why is US 30-year treasury bond price important?

It is a norm that when bond price rises, interest rate falls and vice versa.

Thus investors need to to be able to read the bond price chart in order to understand the trend of US interest rate.

As the US is the world's largest economy, the impact of their interest rate tends to affect smaller countries such as Singapore and Malaysia.

In turn, the interest rates changes will affect the stock market in these countries.

It is said that investors in the US are not keen to buy shares once the 30-year treasury bond hits a yield of more than 8%.


Bond price ----> Bullish (rises)
===> decrease in interest rate ===> rise in share prices

Bond price----> Bearish (falls)
===> increase in interest rate ====> fall in share prices

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