EXCERPTS:
"Even before last week's selloff in risky assets, investors worried about slowing growth were buying up Treasury debt. To some, this is a preview of what is going to happen when the Federal Reserve ends its bond-buying program less than two months from now.
Over the past four weeks, the yield on the 10-year Treasury note has fallen from 3.58% to 3.16%, its lowest level since December. The bond market rallied even though the biggest buyer of Treasurys over the past several months is planning to leave the market at the end of June.
Gains in Treasurys have been driven largely by weak economic data. Even a better-than-expected jobs number Friday couldn't derail the market.
The recent rally is evidence for some investors that the end of the Fed's second big bond-buying program, known as quantitative easing, or QE2, might actually benefit or, at worst, be a nonevent for bonds.
It could be a boon for Treasurys if economic growth slows, knocking down commodity prices and reducing the risk of inflation.
"If QE2 contributed to stocks and to risk assets and to the commodity bubble, well, what happens after QE2?" said David Ader, head of government-bond strategy at CRT Capital. "When QE2 ends, maybe those assets go the other way, and people buy more Treasurys."
