Bond Prices Fall on Tax Overhaul Plan

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Bond prices fell to lower levels on Friday after a struggle to find direction over the past few weeks. The yield on the 10-year Treasury note finished on Friday at 2.409%, which is 0.099% lower than the close last Friday.

It is common knowledge that yields rise when bond prices fall. Such is becoming the case; bond prices are beginning to fall after President Trump’s intentions to overhaul the tax code within the next three weeks. President Trump’s business-friendly nature suggests that the overhauled tax plan will make equity investments more attractive to investors, since large tax cuts will provide a boost to the economy. This makes bonds less attractive to investors as they begin to pursue riskier assets.

For the most part, Treasury yields have been fairly stable this year. Until we see more clarity in Trump’s plans, it is unlikely that we will see much volatility in the bond market.

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Want to take a look at how bonds are doing? Log into your NHSJF account and click the ‘Terminal’ link on the toolbar at the top of the screen. Enter “DGS10”, the ticker symbol for the 10-Year Treasury Constant Maturity Rate into the search bar. Feel free to explore the tool, and share your thoughts in the comments below!

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