Investor Fear Creates a Mad Dash for the Bond Market

Posted by Dan Denning on Aug 22nd, 2007 

You don’t often see yields on three-month U.S. Treasury notes fall by 66 basis points in one day. Then again, in polite (or even impolite society) the yield on three-month Treasury notes is not a subject you’d willingly bring up-unless you wanted to make a spectacle of yourself. But financial panics can bring even obscure subjects to the lips of an everyday punter.

The flight to cash has been more like a mad rush for the last two weeks. “The market is totally, absolutely, completely in fear mode,” according to John Jansen. Jansen’s been busy lately selling Treasuries for CastleOak Securities LP in New York. Earlier this week he told Bloomberg that, “People are afraid that lots and lots of mortgage paper and mortgage paper derivatives of all sorts is completely opaque and they can’t price it.”

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