Question

Given the headline: "TREASURIES-Yields rise as US, China trade deal boosts risk appetite."

U.S. investors are:

Group of answer choices

a. Pessimistic about the U.S. bond market, driving bond prices lower

b. Excited about the U.S. bond market, driving bond prices higher

c. Optimistic about moving money into the bond market given lower overall risk

d. Pessimistic about the stock market given heightened risk

Answer 1

Yields of a Treasury Security is inversely related to its prices. According to the headline, the yields of the T-Securities are rising i.e., the prices of T-Securities are falling.

This is due to the optimistic investor sentiments which led to investors moving their money away from investing in the T-Securities to higher risk bonds in search of higher returns given that overall risk of investing in the bond market came down due to the trade deal between the U.S. and China.

Ans: c. Optimistic about moving money into the bond market given lower overall risk