Interest rates are the lowest since the 1960's. What will happen when interest rates start to rise?
NEW YORK (Dow Jones)--Treasurys were lower Wednesday as doubts about the Federal Reserve buying government bonds on a large scale dented demand for a $35 billion sale of five-year notes.
Demand for the notes was still healthy as they were sold at a yield of 1.33%, the second-lowest auctioned yield for the maturity. The record-low yield was set at last month's sale at 1.26%.
But the yield was above the 1.322% traded right before the sale. The higher yield means bidding prices were weaker than market participants had anticipated.
The auction was 2.82 times oversubscribed, compared with 2.86 for the previous four auctions.
The indirect bid, a proxy of buying from foreign investors including central banks, was 39%, compared with the average of 45.7% for the previous four auctions.
"Indirects were slightly soft, but overall an average auction amid a correcting bond market, and we look ahead to the seven-year tomorrow, which we feel has the best potential to succeed," said John Briggs, U.S. interest rate strategist at RBS Securities Inc. in Stamford, Conn."
Do you guys think that, just maybe, rising interest rates are bad for stocks?