But even the Federal Reserve watches the 10 -
year Treasury yield before making its decision to change the fed funds rate.
Not exact matches
10 -
year AA muni bonds offer
yields above those of U.S.
Treasuries, even
before accounting for their tax advantage (source: Bloomberg).
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
For example, the research shows that in the 12 months
before a market peak, U.S. 10 -
year Treasury yields have on average widened by more than 100 basis points.
Before The Bell - A modest decline in
yields on the 10 -
year Treasury note helped stocks get off on a bullish note yesterday.
This modestly exceeds the
yield available on a 10 -
year Treasury, but by a small margin that - outside the late 1990's bubble period - has previously been seen only during the two -
year period approaching the 1929 peak, between 1968 - 1972 (which was finally cleared by the 73 - 74 market plunge), and briefly in 1987,
before the crash of that
year.
Trying to anticipate the changing environment, and high corporate debt levels, suggest it would be wise to start taking a more defensive position on equities long
before yields on 10 -
year Treasuries reach 5 %.
A five -
year Treasury bond
yielded only 0.9 percent — and that's
before inflation took 3.8 percent.
My summary advice for the FOMC would be this:
before you flatten / invert the
yield curve, start selling all of the long MBS and
Treasury bonds with average maturities longer than 10
years.
For example, as of December 31, 2017, muni bonds were
yielding 2.36 % and 10 -
year US
Treasuries were
yielding 2.72 %
before taxes.
Before, we used the
yield on the 30 -
year Treasury Bond.
Stocks initially edged higher
before turning lower in choppy trade, while the three -
year Treasury yield hit a one - week low.
The benchmark 10 -
year Treasury yield ended 2017 around 2.41 percent, though
yields fell around midyear, touching a low of 2.06 percent in September
before recovering to current levels.
For example, as of December 31, 2017, muni bonds were
yielding 2.36 % and 10 -
year US
Treasuries were
yielding 2.72 %
before taxes.
The interest rates on Federal education loans change on July 1, and are based on the 91 - day rate from the last
Treasury auction in May and the average one -
year constant maturity
Treasury yield (CMT) for the last calendar week ending on or
before June 26th.
10 -
year AA muni bonds offer
yields above those of U.S.
Treasuries, even
before accounting for their tax advantage (source: Bloomberg).
Before we talk about why I think interest rates would rise, it helps to revisit some of the reasons behind the 10 -
year U.S.
Treasury note being stuck at
yielding a low 2 %.
Closing out a short week
before the U.S. fourth of July holiday, the
yield - to - worst of the S&P / BGCantor Current 10
Year U.S.
Treasury Index closed at 2.38 % on Thursday, July 2, 2015.
The U.S. 10 -
year Treasury bond
yield started this week higher (on June 22, 2015) at 2.3 %, as a new proposal by Greek Prime Minister Alexis Tsipras has put the negotiations back on track and given optimism to an eventual settlement
before the June 30, 2015, deadline.
Before the start of every economic recession in the United States since the mid-1970s, the difference in
yields between 10 -
year and 2 -
year U.S.
Treasury bonds turned negative — meaning that the 10 -
year bond offered a lower interest rate than the 2 -
year bond (see chart).
Bond
yields hit their
year - to - date lows in early September, with the 10 -
year Treasury yield getting as low as 2.03 %
before trending back up towards 2.40 %.
After starting last week at a
yield of 2.52 %, the
yield of the S&P / BGCantor Current 10
Year U.S.
Treasury Bond Index climbed to a high of 2.72 % to close the index
before the July 4th holiday.
My summary advice for the FOMC would be this:
before you flatten / invert the
yield curve, start selling all of the long MBS and
Treasury bonds with average maturities longer than 10
years.
«We've designed each
Treasury FITR portfolio to match the performance,
before fees and expenses, of a consistent - maturity Ryan
Treasury Index which allows investors to stay at the same point on the
yield curve without having to adjust their own portfolios,» said Gary Gastineau, managing director of ETF Advisers and interview guest earlier this
year.
We've written
before about the valuation mountain (Arnott, 2011) that emerges across the spectrum of real interest rates, which we define as the 10 -
year Treasury yield minus the prior 3 -
year CPI.
Per legislation signed into law in 2013, the rates are based on the high
yield of the 10 -
year treasury note during the last auction held
before June 1.
EE Bonds issued
before May 2005 adjust twice a
year based on
Treasury Security
yields.
The
yield on 10 -
year Treasury bonds was roughly 2.3 percent early this week, up from about 1.75 percent just
before the election.
The benchmark 10 -
year Treasury yield rose to 5.25 % in early June, far above May levels,
before dipping again.