The Demise of the 30-Year Treasury Bond as a Benchmark for pricing Fixed-Income Securities

Jones, David M.
October 2000
Business Economics;Oct2000, Vol. 35 Issue 4, p16
Academic Journal
With all the drama and finality that the prestigious Wall Street Journal could muster, it declared this past May 3 that the reign of the 30-year Treasury bond as the benchmark for pricing fixed-income securities in the $14.7 trillion U.S. bond market had ended. Without missing a beat the Wall Street Journal shifted the "benchmark" crown to the brow of the 10-year Treasury note, already the basis for the rate that is charged on most home mortgages. This article will examine the reasons for the demise of the 30-year Treasury bond as the U.S. bond market benchmark and consider possible substitutes to be used as the new benchmarks for pricing fixed-income securities. This search for a new benchmark is important because of the crucial role that long-term interest rates play as an influence on aggregate demand, particularly business investment and housing activity, and in timely portfolio shifts between bonds and stocks.


Related Articles

  • Market Post: Prices Flat; Looking at Taxables. Barnett, Chip; Weitzman, Aaron // Bond Buyer;2/13/2015, Vol. 1, p1 

    Prices of top-rated municipal bonds were flat at mid-session, traders said, with yields on most maturities unchanged. Treasury bond prices were slightly stronger after the release of weak retail sales and weekly jobless claims data but bond gains were capped by rising equities.

  • The End of the Treasury Bull Run. Lim, Paul J. // Money;Jan/Feb2010, Vol. 39 Issue 1, p94 

    The article discusses ways for investors to manage their fixed-income portfolios after the economic downturn and reduced returns from U.S. Treasury bonds. For risk-averse investors the author suggests moving a portion of Treasury holdings from funds into individual issues. Investors willing to...

  • Waves and cycles point to T-bond top. Weis, David H. // Futures: News, Analysis & Strategies for Futures, Options & Deri;Jun99, Vol. 28 Issue 6, p26 

    Reports on technical evidence suggesting the end of the upwave to Treasury bond prices in the United States. Likelihood that bonds will form a lengthy top; Volatile topping process; Downturn in bonds coupled with a bottom in commodity prices as bearish for equities; Lags between markets;...

  • Treasury's one-year bills draw 4.4% yield. Selway, William // Bond Buyer;11/10/98, Vol. 326 Issue 30518, p2 

    Notes the yield drawn by the Treasury's one-year bills. Coupon equivalent; Competitive tenders; Median yield.

  • Treasury sells 3-month and 6-month T-bills. Selway, William // Bond Buyer;11/10/98, Vol. 326 Issue 30518, p2 

    Notes the average tender rates for the Treasury's latest 91-day, 182-day, 3-month and 6-month discount bills. Coupon equivalents; Average price.

  • No safe port in latest storm. Appell, Douglas // Pensions & Investments;6/11/2012, Vol. 40 Issue 12, p1 

    The article looks at fixed-income investments as of 2012 and whether they will continue to play a "safe haven" role of limiting the downside risk in investment portfolios that they have in the past. It notes the low interest rate on U.S. Treasury securities, but says that in May 2012, as an...

  • MARKET INDEXES.  // Pensions & Investments;7/26/2004, Vol. 32 Issue 15, p30 

    The article presents a chart representing stock price indexes. Total market rate of blue-chip U.S. stocks in June was 1.46. Growth rate was 1.18. Growth rate of midcap U.S. stocks was 1.59. Total market rate of all U.S. stocks was 1.99. International fixed income of J.P. Morgan Global Government...

  • Indexes Rise as Oil Prices Fall Following Less-Than-Expected Storm Damage. Curran, Bill // Bond Buyer;9/30/2005, Vol. 353 Issue 32229, p49 

    Reports on the rise in bond yield indexes as oil prices fell after Hurricane Rita caused less damage in the Gulf Coast. Soaring of energy costs as an impediment to economic growth; Attributions of the fixed-income losses to falling oil prices; Revision of the personal consumption expenditures index.

  • Economic Risk: Investors To Lock In On MBonos.  // Latin America Monitor: Mexico Monitor;Jul2010, Vol. 27 Issue 7, p5 

    The article reports that the yield on the peso-denominated treasury of Mexico, MBono, has hit a record low of 7.1%, as the local fixed income market stands to benefit from higher liquidity and the participation of a wider range of institutional and portfolio investors from around the world.


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics