Concern over a weak U.S. economy has sent investors scurrying to bond markets, analysts said.

Concerns were heightened when the U.S. Treasury forwarded a plan to Washington lawmakers Monday to increase credit lines and allow for the government to purchase equity in the Federal Home Loan Mortgage Co. and the Federal National Mortgage Association.

The two mortgage brokers, representing trillions of dollars of debt, have seen their share values plummet, down 80 percent in recent trading, ABC News reported.

When the sky is falling, people still run to Treasuries, Gary Schatsky, the head of ObjectiveAdvice.com told ABC News.

The perception of risk can trickle over to Treasury bonds, especially if the government flirts with investing in companies as huge as Freddie Mac and Fannie Mae. But, analyst said the Treasury bond markets remains safe.

Treasuries are still an outstanding investment, Bruce Tucker, a principal at Sterling Financial Planning told ABC News.

Although bond yields have fallen, we've been telling our clients to stay the course, Tucker said.

I'm confident in the creditworthiness of the U.S. government, Schatsky said. If I have to draw a line in the sand, I'm going to draw it there.

Copyright 2008 by United Press International


Publication date: 16 July 2008   

Source: UPI-1-20080716-15191400-bc-us-treasuries.xml

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