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Treasury Bonds Will Remain Hot as Long as Recovery Remains Tepid

The slowness of the economy to recover from the recession, plus the lack of inflation in the system means that US Treasury yields may remain low for a while longer, says Kirk Barneby, portfolio manager of the Centre Active U.S. Treasury Fund. Barneby says short covering is also playing a large role in rising government bond prices as traders have overwhelmingly expected rates to rise by now. Foreign buying has also played a large part in keeping yields low in Barneby's opinion. Finally, Barneby says his fund is neutral to the market so he is participating in the move up in prices, and he expects yields to move higher by year end.