1. Interest Rates
2. Inflation
3. Economic Growth
When the Federal Reserve
lowers its key interest rate
(FEDERAL FUND RATE), it
creates additional demand for
Treasuries this leads to lower
INTEREST RATE or Vice Versa.
In inflationary environments,
investors are forced to reach
for greater yield to
Compensate for Diminished
Purchasing Power in the
future.
If the ECONOMY is growing
at 5% and STOCKS are
yielding 7%, few will buy
Treasuries unless they are
yielding more than stocks.