Bonds Brace For Another Wild Week
Bond investors should get ready for another bumpy ride in Treasurys this week as stock markets remain unsettled and the Federal Reserve gathers for its rate-setting meeting.</br></br>Markets continue to expect another interest-rate cut, although investors have scaled back bets for a half-percentage-point move in the federal-funds target rate to 3% and now see a quarter-point cut as more likely. The week also is laden with data from the durable-goods report to January readings on national manufacturing activity and payrolls.</br></br>Investors are split as to where the two-year-note yield, the most sensitive to policy changes, is headed.</br></br>"The battle between safety and value will persist," said Chris Sullivan, who oversees $1.3 billion as chief investment officer at the United Nations Federal Credit Union. Mr. Sullivan said the two-year note's rally last week -- which took the yield down to levels not seen since 2004 -- had more to do with risk aversion than with economic fundamentals.</br></br>He has shifted out of shorter-dated notes into the five- and 10-year sectors.