The yield on the U.S. 10
year Treasury bond recently hit 9 - month highs and the 2s10s spread widened on news of the Bank of Japan trimming its long - dated bond buying program and questions around China's ongoing purchase of U.S. Treasuries (USTs) with its foreign - exchange reserves.
The yield on 10 -
year Treasury bonds recently stood at 2.3 %.
Not exact matches
Although the yield of a 10 -
year U.S.
Treasury bond has risen
recently to around 2.50 % — that's not too far from where it was at the beginning of 2017 (source: Bloomberg, as of 1/10/2018).
However, the reaction of the
bond market is another story altogether, with yields on 10 -
year Treasuries recently returning to about where they were when this
year began.
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.
The 10
year treasury rate is the yield to maturity (not the coupon rate) of the most
recently auctioned 10
year treasury bond.
The global
bond market's primary benchmark, the 10 -
year U.S.
Treasury yield,
recently exceeded 3 % for the first time in several
years.
For example, with five - to 10 -
year Treasuries recently yielding 1.5 % to 2 %, paying even the 1 % or so average expense ratio for an intermediate - government
bond means you're losing half or more of that yield to expenses.
Although the yield of a 10 -
year U.S.
Treasury bond has risen
recently to around 2.50 % — that's not too far from where it was at the beginning of 2017 (source: Bloomberg, as of 1/10/2018).
Well, since you don't want to run the risk of incurring investment losses that could deplete your savings too soon, you'll want to stick to a pretty secure investment, say, 10 -
year Treasury bonds, which
recently yielded about 2 % annually.
The investment seeks daily investment results that correspond to 125 % of the inverse of the daily movement of the most
recently issued 30 -
year U.S.
Treasury Bond.
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.
But given today's low interest rates (
recently about 2.3 % for 10 -
year Treasuries) and relatively rich stock valuations (Yale finance professor Robert Shiller's cyclically adjusted P / E ratio for the stock market
recently stood at 29.2 vs. an average of 16.7 since 1900), it would seem to strain credulity to expect anything close to the annualized returns of close to the annualized return of 10 % for stocks and 5 % for
bonds over the past 90
years or so, let alone the dizzying gains the market has generated from its post-financial crisis lows.
So let's say you invest your hundred grand in something relatively stable like 10 -
year Treasury bonds, which
recently yielded about 2.2 %.
The Citi 30 -
Year TIPS (Treasury Rate - Hedged) Index tracks the performance of long positions in the most recently issued 30 - year Treasury Inflation - Protected Securities (TIPS) and duration - adjusted short positions in U.S. Treasury bonds of, in aggregate, approximate equivalent duration to the T
Year TIPS (
Treasury Rate - Hedged) Index tracks the performance of long positions in the most
recently issued 30 -
year Treasury Inflation - Protected Securities (TIPS) and duration - adjusted short positions in U.S. Treasury bonds of, in aggregate, approximate equivalent duration to the T
year Treasury Inflation - Protected Securities (TIPS) and duration - adjusted short positions in U.S.
Treasury bonds of, in aggregate, approximate equivalent duration to the TIPS.
In fact, our colleague Ed Studzinski
recently pointed out the long term
bonds have done exceptionally well this
year (e.g., Vanguard Extended Duration
Treasury ETF up 26.3 % through September).
Investment adviser and ETF guru Rick Ferri's
recently released long - term forecast for stock and
bond returns estimates annualized returns over the next few decades will come in at 7 % or so for large - company stocks and 4 % or so for 10 -
year Treasury bonds, assuming 2 % inflation.
With the Fed now hiking, the bellwether 10 -
year Treasury note yield has risen from 1.4 % in mid 2016 to nearly 3 %
recently, lifting yields on other high - quality
bonds.
The following graph of 10 -
year treasury bonds illustrates both how low current rates are, and that they have been rising
recently.
As
recently as the November 2016 election, the S&P 500's dividend yield (2.0 % +) was higher than the 10 -
year Treasury bond's yield (1.75 %).