Over the past few weeks interest rates were pushed lower as violence and tension increased abroad. But with Vladimir Putin saying Russia isn't going to risk confrontation with the world, those risks are diminishing.
But rather than sell bonds, investors are buying bonds because developed economies have been turning out poor economic data. It seems that no matter what, investors just want a reason to continue buying bonds and pressuring rates lower.
Case in point: The iShares Barclays 20+ Year Treasury Bond (TLT) exchange-traded fund pushed higher, not so much Putin's remarks but on weak economic data out of the United States, Europe and Japan.
Interest rate-sensitive assets in the U.S. including the iShares Core Total US Bond Market ETF (AGG), iShares Barclays MBS Bond (MBB), iShares S&P National AMT-Free Muni Bd (MUB), SPDR Barclays High Yield Bond (JNK), and Vanguard REIT Index ETF (VNQ) all pushed towards yearly highs as global rates fell.
From Japan to the U.S., no country came away unscathed. Japan released preliminary economic growth numbers on Wednesday showing a contraction of 1.7% from April to June on a quarter-on-quarter basis. The news ensures that Japanese stimulus will remain in place for years to come.
In Europe, weak German data pushed the yield on German 10-year government bonds, also known as bunds, below 1% to as low as 0.99%, an all-time low. Similarly, the German ZEW Economic Sentiment Index, which measures the level of optimism about the current economic situation, gave a reading of 8.6 in August, down from 27.1 in July.