Every Single Bond In The BBBI Falls In ValueMarch 5th, 2012 by Marc Prosser
For the first time in history of the Big Bad Bond Index, every one of 29 components of the index fell in value. The index tracks the bond of large publicly traded companies. The BBBI fell 5 points to $1,145.79 (the average price of a bond in the index.) The bigger losers included bonds from AT&T (T), Travelers (TRV), Alcoa (AA) Wal-Mart (WMT) and Proctor and Gamble (PG). All of these bonds lost $10 or more in value per bond.
The BBBI followed the treasury market today with the 2, 5, 10, and 30 year bonds all falling in price. The yield on the benchmark 10-year Treasury fell 0.03% to close at an even 2.0%. Driving all bond market activity was positive US economic data and news from China and Greece. The ISM survey of non-manufacturing came in at 57.3, both higher than the expectation of 56 and the previous reading of 56.8. Any reading above 50 is considered to be a sign of economic expansion.
If the economy is expanding and there has been several months of economic data to suggest that it is, then yields on bonds should rise and prices fall.