The 10-Year Treasury Note

Chart of the Week for December 3-9, 2004

The 10–year Treasury note appears to be ending a recent five month trend of yielding lower. One of the primary factors to which analysts are attributing this upward movement is the weak US dollar. Exchange rate concerns are making investment from foreign buyers a less attractive option. While the dollar is weak, more local currency may be required to purchase the US Treasuries but selling them in the future may return less. As demand decreases for 10–year Notes, lower prices could result and therefore, yields would be pushed even higher. While foreign investment is a driving influence right now for Notes, bond traders are still watching job reports and other economic indicators for signs of higher inflation, which is another key factor in pushing yields higher.

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