The yield on the benchmark 10 - year Treasuries slipped 1 basis point to 2.95 percent, the super-long 30 -
year bond yields also fell 1 basis point to 3.12 percent and the yield on the short - term 2 - year traded 1-1/2 basis points lower at 2.48 percent by 10:45 GMT.
The yield on the benchmark 10 - year Treasuries slumped 2 basis points to 2.97 percent, the super-long 30 -
year bond yields also plunged 2 basis points to 3.15 percent and the yield on the short - term 2 - year traded nearly 1 basis point lower at 2.48 percent by 12:35 GMT.
Not exact matches
It was nudging up at 2.96 percent on Tuesday, which
also left the gap between U.S. and German 10 -
year benchmark
bond yields just off its widest level in nearly three decades.
The
yield on the benchmark 10 -
year Treasury notes, which moves inversely to price, was lower at around 2.43 percent, while the
yield on the 30 -
year Treasury
bond was
also lower at 3.046 percent.
The
yield on the benchmark 10 -
year Treasury notes, which moves inversely to price, was higher at around 2.314 percent, while the
yield on the 30 -
year Treasury
bond was
also higher at 2.877 percent.
This leaves us roughly in the same position that we started the
year, slightly overweight to spread product, i.e., investment - grade and high -
yield corporate
bonds and emerging markets (more recently, we
also went back to a slight overweight on commercial mortgage - backed securities).
To receive the full benefit of a
bond ladder, one needs not only to stay the course for a number of
years (so that lower
yield and higher
yield purchases benefit from cost averaging), but
also with a relatively stable amount of capital.
A rise in the US 10 -
year yield to 2.998 % (4 -
year high) was dollar supportive, and rise in global
bond yields also weighed on gold with the German Bund (0.603 % - 0.639 %), UK Gilt (1.49 % - 1.53 %) reaching 1 - month highs.
Desai said that high -
yield bonds also mean high risk, and pointed to the volatility of high -
yield energy
bonds, especially in the past
year.
The REIT that was was attractive with a 5 % dividend
yield when the 10 -
year bond yield was at 2 % is no longer attractive when the 10 -
year bond yield is
also at 5 % because the 10 -
year bond is risk - free.
We
also mentioned that the initial spike in
bond yields after President Trump was elected seemed unlikely to continue this
year.
As we've
also mentioned before — and as this
year's
bond market behavior emphatically demonstrates — longer - term
bond yields don't have to rise just because the Fed is hiking rates.
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.
Do they not recognize that the absence of
yield on short - term money is exactly why stocks and
bonds are now
also priced to deliver next to nothing over the coming 10 - 12
years?
BIS's latest quarterly review
also argued that higher short - term
bond yields have consistently failed to lift term premium nor dampen risk - parity flows in recent
years:
The continued downward movement on U.S.
bond yields has
also been somewhat unexpected, given that the Fed is setting the stage for higher interest rates later this
year.
In Europe, the
yield for the 10 -
year German
bond TMBMKDE - 10Y, +1.25 %
also known as bunds, fell sharply by 5.2 basis points to 0.527 %, according to Tradeweb data.
High -
yield bonds, those from companies with weak financial positions and poor credit, are offering rates as high as 9 % for 30 -
year terms but
also offer the risk of bankruptcy before the
bond matures.
Bonds were
also on the move, with
yields pressing higher after falling on Monday, with the 2 -
year yield hitting 2.26 % and the 10 -
year yield rising to 2.89 %.
Peter Schiff
also points out that the last time the US 10
year bond yield crossed 4 %, there were a lot of problems.
Domestic
bond market volatility
also decreased last
year with 10 -
year Treasury
yields trading in a tighter - than - normal range.
Yet we believe another milestone is of far greater significance to investors:
Yields on short - term U.S. investment grade (IG) corporate
bonds also hit 3 % — an eight -
year high.
Bond yields also collapsed after the press conference with the US Government 10
year yield plummeting to 1.92 %.
This return
also falls below what seven -
year Treasury
bonds were
yielding at the time, which was 6.1 percent.
It doesn't help that 10 -
year bond yields are still lower than the prospective operating earnings
yield on the S&P 500 (the «Fed Model»), not only because the model is built on an omitted variables bias (see the August 22 2005 comment), but
also because the model statistically underperforms a simpler rule that says «get in when stock
yields are high and interest rates are falling, and get out when the reverse is true.»
This week's chart shows how U.S. dividend stocks have outperformed the S&P 500 over the past
year, a trend we have
also seen in other regions, as ultralow
bond yields have intensified the hunt for income.
Yields on 10 -
year Japanese government
bonds have
also fallen back to be close to the lowest they have been in the past eighteen months.
The S&P Indonesia Sovereign
Bond Index was up 6.18 % YTD and 11.90 % over the one -
year period, while its
yield also came down 72 bps from 7.88 % in December 2016, see exhibit 1.
The
yield of the broader S&P Municipal
Bond Index
also remained unchanged on the week at a 2.67 % though unlike Puerto Rico, the broad index is returning 5.59 %
year - to - date.
They invest primarily in high
yield bonds with an effective maturity of less than three
years but can
also have money in short term debt, preferred stock, convertible
bonds, and fixed - or floating - rate bank loans.
We
also compared the five -
year annualized volatilities of the S&P Pan Asia
Bond Index (denominated in USD) with other major bond markets, such as the U.S. treasury, U.S. investment grade corporate, U.S. high yield corporate, Eurozone sovereign and Australian bond markets, see the exhibit be
Bond Index (denominated in USD) with other major
bond markets, such as the U.S. treasury, U.S. investment grade corporate, U.S. high yield corporate, Eurozone sovereign and Australian bond markets, see the exhibit be
bond markets, such as the U.S. treasury, U.S. investment grade corporate, U.S. high
yield corporate, Eurozone sovereign and Australian
bond markets, see the exhibit be
bond markets, see the exhibit below.
This week's chart shows how U.S. dividend stocks have outperformed the S&P 500 over the past
year, a trend we have
also seen in other regions, as ultralow
bond yields have intensified the hunt for income.
We
also use high
yield corporate
bonds and that's generally been a very strong performer but it did slip within the 3rd quarter and, for the
year to date, high
yield corporate
bonds are down 3.7 %.
I
also presented in Article 6.2 that the «sweet spot» for
bond durations is around 7
years, because it balances between decent
yields and manageable potential price declines.
Yet we believe another milestone is of far greater significance to investors:
Yields on short - term U.S. investment grade (IG) corporate
bonds also hit 3 % — an eight -
year high.
The rising price ratio for the iShares 7 - 10
Year Treasury (IEF): iShares iBoxx High
Yield Corporate
Bond (HYG)
also indicates investor preference for perceived safety.
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.
But with about 36 percent in «stable market»
bonds, the mix
also includes 5 percent in high -
yield bonds and 10 percent in emerging market
bonds, he said, which may be riskier than some investors want with college four
years away.
If an investor had a portfolio consisting of just municipal or government
bonds yielding 5 % per
year and a portfolio made up of highly volatile and risky tech stocks
also yielding 5 % per
yield, the «better» portfolio would be the one with the municipal one.
This
year investors who followed the MFIP were led to shorten maturities (therefore lowering their interest - rate risk) and
also to use higher -
yielding corporate
bonds rather than Treasuries or mortgage - backed securities (thereby keeping lower duration and less interest - rate risk).
You can
also note that short - term and 10 -
year Treasury
yields have risen, lowering the valuation advantage versus cash and
bonds.
High
yields produced the highest returns over this full seven -
year period, but they
also suffered steep double - digit losses in 2008, unlike any of the other
bonds represented.
The
yields on German 10 -
year bonds also ventured into record - low territory, selling with a
yield of negative 0.05 %.
It
also says that the recent move up in 10 -
year Treasury
bond yields has been due to a combination of both increases in inflation expectations on the back of economic growth and capacity, as well as an increase in real
yields due to a relative shift in the supply and demand for capital.
This return
also falls below what seven -
year Treasury
bonds were
yielding at the time, which was 6.1 percent.
KTP
also carries a unique call - option: callable at any time at a price that would make the
yield equal to the 30 -
year US Treasury
bond plus 20 basis points and never less than par ($ 25).
The S&P U.S. Issued AAA Investment Grade Corporate
Bond Index is the 10 basis point mover whose
yield is presently as 2.19 % and
also leads the rating categories by being 32 bps tighter
year - to - date from its starting point of 2.51 %.
On the other hand, 10 -
year Canada
bond yields are
also low by historical standards, at 1.3 per cent.
Also, with
yields so low on five -
year Treasuries at 1.65 %, that should be reflected into the future for the strategy, so maybe the amount of
bonds should be reduced?
The table
also shows
yields for Aaa and Baa
bonds (25 - 30
years in length), and the spread between them.