Unraveling the Mystery Behind U.S. Treasury Prices

Recent trading in U.S. government debt has puzzled even seasoned pros. BusinessWeek looks into the Treasury market's stratospheric pricing

In a season characterized by an ever-growing list of unprecedented events—from repeated capital infusions by the federal government into U.S. financial institutions to historically high market volatility—it's tempting to shrug your shoulders when you come across truly puzzling valuations that appear to ignore economic fundamentals. Still, the extent to which investor demand for U.S. Treasury bonds has sent prices soaring and yields plummeting seems to defy reason.

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