Brazil and Mexico 10 -
year Treasuries both yield over 6 %.
A chart of 10 -
year Treasury yields over the past month captures the entirety of the recent move that has created so much anxiety.
Not exact matches
LONDON, April 30 - The 10 -
year U.S.
Treasury yield's rise above 3 percent last week for the first time in
over four
years may be cause for concern across wide swathes of financial markets, such as equities and emerging markets.
That's exactly what has happened
over the last month, as shown in this graph of the
yield on the 10
year US
treasury bond for the last
year (keep in mind that
yields going up means prices going down):
The average
yield on the 10 -
year Treasury note
over the past 30
years is 4.834 percent, still well above current levels.
LONDON, April 30 (Reuters)- The 10 -
year U.S.
Treasury yield's rise above 3 percent last week for the first time in
over four
years may be cause for concern across wide swathes of financial markets, such as equities and emerging markets.
Concern remained
over higher bond
yields after the
yield on the U.S. 10 -
year Treasury breached 3 percent level on Tuesday, making equities relatively less attractive.
Dividends on the Dow Jones Index are
yielding about 2.6 %, a full half a percentage point
over the 10 -
year Treasury.
Over the weekend, Jeff Gundlach, the CEO of investment services firm DoubleLine told Barron's that he believed the 10 -
year Treasury yield could test the 2012 low of 1.38 percent if the price of oil fell below $ 40 a barrel.
By 1970 the 10
year treasury yield was all the way up to 7.8 %, eventually reaching
over 15 % in the early 1980s.
Today, those bonds
yield just
over 3 %; the 10 -
year Treasury currently generates about 2.3 % (source: Bloomberg, as of 10/19/2017).
But this week the 10 -
year Treasury lost roughly 1.4 points, which translated into a 15 basis point jump in its
yield to 2.84 % The long bond closed
over 3 %.
1: Widening credit spreads: An increase
over the past 6 months in either the spread between commercial paper and 3 - month
Treasury yields, or between the Dow Corporate Bond Index
yield and 10 -
year Treasury yields.
The benchmark 10 -
year U.S.
Treasury Note has moved from a
yield of 2.06 percent on November 9, 2016 to a
yield of a tad
over 3 percent earlier this week.
Our Investment Strategy Report published on March 19 compared equity and bond
yields over multiple business cycles and found that the 10 -
year Treasury yield might have to sustain levels exceeding 3.5 % (far above what we believe is likely this
year) before compelling a
year - end 2018 S&P 500 Index target range below our current
year - end target of 2800 - 2900.2
Consequently, U.S.
Treasury yields have,
over the last 30
years, declined more than high - quality corporate debt
yields,
yields on productive business capital and S&P 500 earnings.
Also, the
yield on the 10 -
year Treasury note was
over 6 % 15
years ago versus roughly 2 % today, making the risk premium of stocks versus bonds much higher today than it was then.
The 2000 peak was accompanied by 10 -
year Treasury bond
yields over 6.5 %.
Over the last 50
years, the real one - and 10 -
year Treasury yields have fluctuated around the dividend
yield (Graph 9, left - hand panel).»
From the Wall Street Journal: «Since 1926 he notes (Bogle), the entry
yield on the 10 -
year treasury explains 92 % of the annualized return an investor would have earned
over the next decade.»
This is the difference between the 5 -
year nominal
treasury yield and the 5 -
year TIPs
yield and is suppose to reflect
treasury market's forecast for the average annual inflation rate
over the next five
years.
The
yield on the 10 -
Year Treasury note is
over 2.85 percent.
The amount of extra
yield over Treasuries provided by high
yield bonds recently was 3.22 %, which is the lowest it has been in 10
years and makes some investors cautious.
Ten -
year Treasury yields hit a seven - month high during October, but receded somewhat amid uncertainty
over who will lead the Federal Reserve going forward.
The Dow and S&P indexes suffered some of their worst losses of the
year last week, and a shocking price move in the bond market sent the benchmark 10 -
year Treasury yield below 2 percent, the lowest level in
over a
year.
After being relatively stable at around 4 per cent
over April, US
yields on 10 -
year treasury bonds fell to 3.1 per cent by mid June (Graph 9).
Based on the data below, for each 1 % increase in the 10 -
year U.S.
Treasury yield, STORE capital's dividend
yield can be expected to rise by about 1.47 %, meaning the share price would be expected to decline (perhaps somewhat meaningfully)
over the short - term.
If one excludes the 1980 - 1997 period, the historical correlation between 10 -
year Treasury yields and 10 -
year prospective (and actual realized) equity returns is actually slightly negative
over the past century, and is only weakly positive in post-war data.
The graph below shows the performance of
Treasuries, equities and high
yield over the past
year.
The graph below shows the performance of
Treasuries, equities and high
yield over the past
year.
Using
yields derived from the
Treasury Inflation Protected Securities (TIPS) market
over the past 20
years, equity multiples have been positively correlated with real long - term interest rates.
My average
yield over Treasuries of same maturities for CDs bought in the last six
years is more than 100 basis points (so 5 -
year CD at 2.5 % if 5 -
year Treasury yield is 1.5 %).
Over the same tightening cycle that ended in 2006, the impact on the 10 -
Year U.S.
Treasury Bond
yield was 60 bps higher, driving the 1 -
Year / 10 -
Year slope to flatten by 265 bps (see Exhibit 1).
And look at how the ten
year Treasury yield, the real rate of interest, and the inflation rate would change
over the next ten
years.
2) More
yield - seeking — spreads on mortgage bonds
over Treasuries are at a 17 -
year low, and as I measure it, and all - time low.
Over the last third of December, 2008, 10 -
year U.S.
Treasury bond
yields hovered at around the 2.10 % mark.
The paltry 0.18 % additional
yield for investing in a 30 -
year Treasury bond
over a 10 -
year Treasury bond speaks volumes.
The amount of extra
yield over Treasuries provided by high
yield bonds recently was 3.22 %, which is the lowest it has been in 10
years and makes some investors cautious.
For a pension plan or endowment, forecast needed withdrawals
over the next ten
years, and calculate the present value at a conservative discount rate, no higher than 1 % above the ten -
year Treasury yield.
When a foreign holder of
Treasuries is willing to give up 40 basis points of
yield on a 10 -
year T - note
yielding 3.80 %, so that they can get paid off in Euros if there is a repudiation of US
Treasury obligations, there is significant uncertainty
over the creditworthiness of the US Government.
In the chart below, high
yield's upside is best when OAS spreads are much higher than they are currently (3.85 %); prospects on 4 -
year forward excess return
over treasuries are relatively dismal when OAS spreads are as low as they are today.
These have an average dividend
yield of 4 %, approximately three percentage points above the current
yield on 10 -
year TIPS, and
over one percentage point ahead of the
yield on standard 10 -
year Treasury bonds.
The
yield on the 10 -
year Treasury note, which is the best market indicator of where mortgage rates are going, is down a little
over one basis point.
Interest rate: Interest rate on BND's portion of the loan is 0.25 %
over the 1 - to 5 -
year US
Treasury Yield Rate with a 2 % floor.
No immediate change in Fed policy is likely — winding down QE3
over the next few months as announced in December will continue, the Fed funds rate target won't shift from its current zero to 25 basis points and the
yield on the ten
year Treasury note won't rise by much.
The ten
year Treasury note closed with a
yield over 2.5 % this week, sparking talk that interest rates may have bottomed.
One hot market
over the
years has been Russia, whose
treasury bonds have been
yielding positive returns since 2015.
For instance, a rising price ratio for iShares 7 - 10
Year Treasury (IEF): iShares iBoxx High
Yield Corporate Bond (HYG) is indicative of a preference for risk - off investment grade credit
over speculative higher
yielding credit.
To the extent that investors wish to compare our 5.6 % estimate for 10 -
year S&P 500 total returns with the 2.7 %
yield on 10 -
year Treasuries, it is important to recognize that the higher 10 -
year expected return in the S&P 500 comes with a several-fold increase in risk, particularly
over a shorter horizon.
Today, those bonds
yield just
over 3 %; the 10 -
year Treasury currently generates about 2.3 % (source: Bloomberg, as of 10/19/2017).