Bonds
Sub-50 Cent Price on Treasury Bond Underscores Investor Pain
- Long-term bonds sold during pandemic hit hard as rates soar
- Positive convexity means debt could be valuable if yields fall
The US Treasury Department in Washington, DC.
Photographer: Stefani Reynolds/AFP/Getty ImagesThis article is for subscribers only.
Fifty cents on the dollar is a very low price in the world of bonds. In most cases, it signals that investors believe the seller of the debt is in such financial distress that it could default.
So when a US Treasury bond sank below that price Monday, it raised eyebrows. The security, due in May 2050, briefly touched as low as 49 29/32, marking the second time in the past two months it’s fallen below the 50-cent level.