I'm embarrassed to ask a dumb question, but...

[lindashaw]

why do Treasuries go up in price when consumer sentiment goes down?

[Boom_cha]

1. Treasuries go up in price when yields go down

(price and yield are inversely related). When consumer sentiment goes up, the likelihood of recovery increases and yields also rise. That's because the stronger the economy is, the more demand there is for money and the more likely that inflation will rise, so bond investors demand a higher return. When consumer sentiment goes down, the opposite happens.

[lindashaw]

3. Ahh, okie, thanks to you both. :)

[rogerashton]

4. In case it is not obvious

why prices go up when yields go down, consider this example:

Last year, when interest rates were 5%, you bought a $10,000 bond (you rich person you).

Five percent of 10,000 is 500 so the bond pays you $500 per year in interest.

This year interest rates are 10%, so you can get $500 per year in interest income by buying a $5000 bond. You want to sell your bond, but nobody will pay more than $5000 for it, since they can get the same interest income by buying a $5000 bond.

Higher yields -- lower bond prices.

It's a little more complicated, since somebody might buy the bond to hold it until it pays back the $10,000 at maturity, but that's the general idea.

[macandcheese]

2. Boom cha is right

Also treasuries go up because of a "flight to quality" - investors fleeing riskier assets (stocks, and corporate bonds) for "safer" assets - government bonds

[rapier]

5. notes

News, like the consumer sentiment number, does not move the market. I know you won't believe it. After all your whole life you have heard the market moved because of blah blah blah. It makes for nice short pithy stories, but it's all BS.

Markets move on the interplay between buyers and sellers with the caveat that insiders in the financial markets have the inside info and often the news in hand before it is announced and use that info to move the markets to their advantage. They game the news. That isn't the same as the news moving the markets. One of thte oldest saws in speculation (investing as it is called now) is buy the rumor, sell the news. In the case of the consumer sentiment one might expect a weak number to encourage the big boys to stage a rally on the announcement and then sell into the rally and perhaps even short it. Very often some watched news item sees a market move as one would expect, ie. consumer number down bonds up, only to see that reversed by the end of the day.

I didn't catch todays number on consumer sentiment. I suppose it was "below expectations" (In itself another game, the manageing of expectations that is) thus fuleing your question. Bonds rallied strongly today. However they have been rallying strongly for awiile and have now wiped out half of the disasterous losses of this summer.
Why have they rallied? Well I suppose I could tell you a story about why. Instead I'll just say there is a lot of money available to buy bonds.

[German-Lefty]

6. Oh come on it's not that bad.

It takes a lot of money to manipulate the market, and you can get screwed doing it by people that swing trade.

Insider trading is imbarasing for the people selling the news or running companines and illegal as in get sent to a federal pound-me-in-the-ass prison. News producers do watch the security of thier news since leaks can cost them thier shirts.

Sure the big boys know some of what's going to happen before hand. If you've got the resources, you can collect data just like the news sources can and use that data to trade with.

Yes the playing field isn't 100% level, but it still isn't that bad. Financial news is worth something otherwise you couldn't sell it.

[swinney]

7. not a dumb question

95% do not know why.

Having been in business for 40 years I heard such questions asked by Presidents of Corporations.

Vice-President of one of top 100 firms had a burr in his butt over what we know as MRO's in manufacturing. He chewed and chewed about reducing the inventory and costs. I was new in the firm.
When I ran a bottom-up review we found that MRO's acocunted for 2.9% of dollars spent and 62% of stockkeeping units. Not enough to spend anything correcting.

Dumbness(lack of knowledge) can be found in corporate offices and boardrooms.

I sat in a meeting with very large firm once and in proposing a price increase on 10 million we purchased from them they were using "averaging averages".

It was not intentional. The President, Vice-President of Finance and Vice-President of Sales did not know what was done. The President was humiliated and some got big time butt chewing.

Stupid questions are oftentimes the best.

Be proud to ask what appears to be dumbness. You win in the end.
[e-mail]

Bad ones are where questioner knows but is not truthful.