Economic Data Points to Upbeat Economy, Treasury Bond Prices Drop

By Kyle Chezum Updated on 12/14/2010

12/14/2010

Following the release of data that revealed a trend of economic acceleration in the previous quarter, investors have been moving funds out of safe Treasury bonds and into riskier assets such as stocks.  This has led to a drop in prices on Treasury bonds, and as prices drop, yields increase.

The increase in Treasury bond yields is significant because mortgage rates are typically tied to these yields.  Mortgage rates have increased in past weeks as a result of this economic activity, despite actions taken by the Fed to keep mortgage rates low.

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