Returns on US Treasuries set to pass 30 per cent this year

Julian Harris
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RETURNS on US Treasuries have boomed in recent months, as investors have turned to long-term American debt.

Hopes of political action over the Eurozone crisis saw Treasuries slip yesterday, yet 2011 as a whole is on course to be one the most successful ever years for bond-buyers.

Despite losing around one and a half points in yesterday’s trading, 30-year Treasuries remain elevated. Yields rose yesterday, following an upturn at the very end of last week, yet stayed below three per cent mark.

And 10-year Treasuries are set to return over 30 per cent this year, analysts expect, smashing the returns gained from government bonds in recent years.

The bonds have steadily increased since earlier in the summer, and are now outperforming gold (see chart on page 5).

Long-term Treasuries have perked up since last week, when the Federal Reserve announced its latest attempt to stimulate the struggling US economy – “Operation Twist”.

Some analysts had feared that the Fed’s asset purchases would stoke inflation and weigh down on the US dollar.