A two -
year Treasury yield now well above the core inflation rate restores a viable and perceived safe investment option that has been missing since the crisis.
Not exact matches
«The spread between the 2 -
year and 10 -
year Treasury is
now the tightest it's been since 2007,» said Rob Morgan, chief investment officer at Sethi: «The flattening
yield curve in 2007 was a harbinger of the Great Recession of 2008.
Up until
now, this issue has mostly been watercooler fodder, but with the Federal Reserve having raised rates in December and Donald Trump's election victory causing the 10 -
year treasury yield to spike by 19 % since election day, many investors are
now reducing their exposure to these rate - sensitive sectors.
(The two -
year Treasury bond
now yields 2.25 percent.)
The 10 -
year Treasury yield ended at 2.8 percent on Feb. 5 and sits right there
now.
And
now the
yield curve is threatening to invert again, with the spread between 10 - and two -
year Treasury note
yields now at its lowest level since that fateful
year.
Ms. Jones points out that from a low
yield of 1.38 percent in July 2016, the 10 -
year Treasury note
now yields nearly 3 percent.
Luciano Siracusano, chief investment strategist at ETF and index developer WisdomTree (wetf), says the 1,400 dividend - paying stocks in the company's WT Dividend index
now have average
yields of about 3 %, twice the
yield of 10 -
year Treasuries.
Pimco, one of the world's largest bond fund managers, and widely followed Guggenheim Partners are among the investors who say benchmark 10 -
year Treasuries yielding 3 percent -
now within reach - are too hard to resist.
Two -
year treasury now higher than S&P 500 dividend
yield.
On the other hand, relative valuations are attractive: 10 -
year U.S.
Treasuries now yield about 150 bps more than the average among G - 7 peers1.
While I'm on the topic of equities, the S&P 500 dividend
yield, for the first time in nearly a decade, is
now below the
yield on the two -
year Treasury.
The correction has brought the S&P 500 Index to a more attractive level, compared to its 30 -
year average of 16.7 x, and this means that the S&P 500 Index valuation has reached an attractive level, given 10 -
year Treasury yields that
now are below 3.00 %.
The
yield on the 10
year Treasury roughly doubled between May of last
year and January of 2014 and has
now slid back 50 basis points this
year — which may not sound like a lot — but on a percentage basis is rather substantial.
A decomposition of 10 -
year US
Treasury yields into a future rate expectations component and a term premium suggests that declining term premia drove long - term rates lower both
now and during the mid-2000s «conundrum» episode.
The Federal Reserve's policy errors are
now becoming quite apparent, particularly when you look at the major homebuilder stocks, The
yield on the 10 -
year Treasury breached below 1.80 today, but even lower mortgage rates aren't doing much to spur sales so far this
year.
The world's biggest wealth fund is for
now sticking to an overweight position in the shorter bond maturities as the U.S. 10 -
year Treasury yield has broken through the 3 percent threshold for the first time since 2014.
That's what to watch for
now - things like the difference between commercial paper
yields and
Treasury bills, the difference between Moody's BAA and AAA
yields, the difference between the Dow Jones Corporate Bond Index
yield and 10 -
year Treasury yields, and so forth.
Right
now the yellow metal is in correction mode on a strengthening dollar and rising two -
year and 10 -
year Treasury yields, both of which share an inverse relationship with gold.
Yields moved lower as the
yield - to - worst of the S&P / BGCantor Current 10
Year U.S.
Treasury Bond Index is
now at a 2.49 % which brings it back down to level Read more -LSB-...]
The 10 -
year US
Treasury yield hit the key psychological 3 % earlier this week and
now threatens to extend its gains, placing risk assets in jeopardy as investors weigh the potential consequences.
Given that
Treasury yields broke through levels that have been a fairly reliable barrier for several
years now, it wouldn't be surprising to see bonds stage a «relief rally» here, but both
yields and market action remain unfavorable overall, holding the Strategic Total Return Fund to a roughly 2 -
year duration, primarily in
Treasury inflation - protected securities.
Now, we will use the
yield on 5 -
year zero - coupon
Treasury STRIPS, which tends to be significantly lower.
With the 10
Year Treasury yield (why this is important) crashing through 2 % and hovering around 1.5 % for weeks
now, it's an optimal time to exploit the lowest rates we've seen EVER (Rate Table).
Yields on 10 -
year Treasuries began the week around 1.75 %, rose as high as 1.88 %, and are
now hovering around 1.84 %.
This is where we are right
now: prior to the election,
yields on 10 -
year Treasuries were sitting somewhere around 1.80 - 1.85 %.
If you are also looking for price appreciation, Stovall also offers up this tidbit: «With the S&P 500
now yielding 2.0 % versus 2.2 % for the 10 -
year Treasury, history reminds us that since 1953 whenever the
yield on the S&P 500 was within one percentage point of the 10 -
year yield, the «500» gained an average of 11 % in price in the subsequent 12 months and was higher about 80 % of the time.»
At a 10 -
year Treasury yield of 1.7 %, interest on reserves of 0.25 %, and a monetary base
now at about 18 cents per dollar of nominal GDP (see Run, Don't Walk), further purchases of long - term
Treasury securities by the Fed would produce net losses for the Fed in any scenario where
yields rise more than about 20 basis points a
year, or the Fed ever has to unwind any portion of its already massive positions.
I expect the 10 -
year U.S.
Treasury yield higher a
year from
now.
There is a positive correlation between the rising USD and rising 10
year Treasury yield right
now.
Now, already you can see that these dividend
yields are two to three times the 10 -
year treasury rates.
The
yield - to - worst of the S&P / BGCantor Current 10
Year U.S.
Treasury Index dropped 15 bps between Aug. 14 - 21, 2015, to 2.05 % and is
now even lower, at 2.03 % as of Aug. 24, 2015.
If
treasury rates in the United States weren't at one to two but were six or eight, we could make a good case for perhaps there's times when you would want to make profits from falling interest rates but right
now I think what our investors are looking for is to have a decent
yield and be protected from their fear of rising interest rates, so until we get out of this context, I think that it's unlikely that we will deviate much from a two or three
year duration portfolio.
Significantly, the
yield on the S&P 500
now exceeds that of the 10 -
year U.S.
Treasury bond — a relationship last seen in approximately 1958.
This means the government is financing itself at close to zero cost for its short term borrowing and, further out on the curve, the cost of financing does not go up by much; as the
yield - to - worst on the S&P / BGCantor 7 - 10
Year U.S.
Treasury Bond Index is
now at 1.48 %.
U.S.
Treasury notes that mature in 3
years now yield 3.7 %.
One more historical comparison worth pondering: the dividend
yield on the S&P 500 is
now safely above the
yield on 30 -
year Treasury bonds.
The S&P 500
now yields about 2.09 percent, and the five -
year Treasury note
now yields about 1.16 percent.
Yields for two and ten
year treasuries as well as for high grade bonds are at five
year highs right
now.
Yields moved lower as the
yield - to - worst of the S&P / BGCantor Current 10
Year U.S.
Treasury Bond Index is
now at a 2.49 % which brings it back down to level Read more -LSB-...]
Nearly a decade ago, the 10 -
year Treasury yield finished 2007 at 4.02 %; it
now stands near 2.50 %.1 When adjusted for inflation, even the 0.75 % bump in the 10 -
year Treasury yield amounts to a modest 0.40 % increase.
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.
In fact, the top 25 large - cap dividend ETFs by assets under management
yield just 2.77 % on average — little better than the 2.32 %
yield on 10 -
year Treasuries right
now.
«The S&P 500
now yields 2.3 %, while the 10 -
year Treasury's
yield at 2.1 % is near historic lows.
Although the 10 -
year Treasury yield,
now at 2.35 %, is a little higher than it was five
years ago (about 2 %), it's about the same as it was in mid-March 2011, and it was almost 3 % in September 2013.
10
Year treasury yields, which are a predictor of upcoming market performance are at a record low right
now.
Now, anyone that does work on the
Treasury yield curve knows that the US government made life tough when they withdrew the 30 -
year back in 2001.
On the other hand, relative valuations are attractive: 10 -
year U.S.
Treasuries now yield about 150 bps more than the average among G - 7 peers1.
Yields moved lower as the
yield - to - worst of the S&P / BGCantor Current 10
Year U.S.
Treasury Bond Index is
now at a 2.49 % which brings it back down to level seen at the end of May.
Now, with the pricing mechanism for every long duration asset - 10 -
year Treasury yields - rising beyond 3 percent, we have yet another headwind for risk assets.