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The article discusses the performance of 10-year U.S. Treasury notes. On June 1, 2011 the yield on Treasuries reached its lowest level since December 2010. Pessimistic reports on manufacturing activity and job growth in the U.S. have made Treasuries popular with investors. However, some including Bill Gross of money-management company Pacific Investment Management Co. expect Treasury yields to rise.

The article reports that stock markets in the U.S. and abroad rose sharply on news that Germany might not insist Greece restructure its debt as a condition of receiving more financial assistance from Europe. Investors have feared that a restructuring could exacerbate debt crises in other struggling nations including Portugal, Spain, and Ireland.

The article reports that U.S. stock prices fell for the fourth consecutive week, as the Dow Jones Industrial Average fell by 0.6 percent in the last full week of trading in May, 2011. The average has declined by 2.9 percent for the entire month of May. It is the second consecutive May in which U.S. stock prices have declined.

The article discusses the potential impact on the prices of U.S. Treasury securities of the June, 2011 conclusion of the Federal Reserve's $600 billion Treasury-purchasing program. Some believe Treasury prices could actually rise if growth in the U.S. economy slows. Others, including Bill Gross of money-management firm Pacific Investment Management Co., say bond prices will fall once the Fed's initiative ends.

The article discusses long-term expectations for inflation for the U.S. economy. The gap between yields on plain U.S. Treasury securities and inflation-adjusted ones does not suggest investors are expecting inflation to escalate sharply. This and other indicators reflect a degree of confidence among investors that the Federal Reserve will be able to contain inflation.

The article discusses a difference of opinion between two bond-fund managers on how the bond market will react to the expected end of the U.S. Federal Reserve's program of buying government securities. Bill Gross of Pacific Investment Management Co. expects prices of U.S. Treasury bonds to decline, while Rick Rieder of BlackRock believes prices will remain stable or even rise some.

The article discusses an unintended decline in the U.S. federal funds rate. The Federal Reserve adjusts this rate when it wants to affect interest rates throughout the U.S. economy. A drop from 0.13% to 0.09% over a one-week period without any intervention by the Fed, though, has raised questions about whether the Fed will be able to manipulate the rate when it feels the need to.

The article discusses a shortage of U.S. Treasury securities in the overnight repurchase market. Rules implemented by the Dodd-Frank financial regulatory-reform law have made it too expensive for some banks to participate in the market, thus reducing the availability of Treasuries. The U.S. Federal Reserve's purchases of Treasuries have also diminished supply.

The article discusses a return to financial markets of trading activity characterized by short-term movements determined by investor attitudes toward risk, a pattern much in evidence during 2010. Investors seeking to embrace risk have been buying stocks, while U.S. Treasury bonds are a popular refuge for those fleeing risk.

The article discusses skepticism about an ongoing bull market in stocks. Since March, 2009 the Dow Jones Industrial Average has risen 86% while the Standard & Poor's 500 index has gained almost 100%. However, some worry that rising oil prices, inflation, and cessation of stimulative efforts by the U.S. Federal Reserve could conspire to push stocks down.

The article reports that various market and economic indicators have regained levels not seen since investment bank Lehman Brothers failed in 2008. Stock prices have doubled since that time, and merger activity has rebounded as well. Markets are seen to have benefited from the U.S. Federal Reserve's $600 billion program to purchase U.S. government securities, and it remains unclear how they will react if that program is not extended beyond June, 2011.

The article discusses rising mortgage rates in the U.S. During the second week of February, 2011 the fixed rate for a 30-year mortgage topped 5% for the first time since the spring of 2010. Although rising rates are an indication of gathering strength in the U.S. economy, they could also exert downward pressure on already-depressed housing prices.