Since April 11 - 2011, the 5
year bond yields went from 2.87 %, down to 2.10 % on June 24th, and have gone up slightly to 2.34 % on July 1st....
Last Friday, Canadian five
years bond yield went just below 2 % mark.
Government of Canada five
years bond yield went below 1.25 % and since last month and it is staying under that mark.
Not exact matches
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):
So, it is a very different market than it was 10
years ago, and you're
going to see a lot of corporate
bond issuance as these infrastructure projects
go out there, and you can capture some pretty good
yields and you know what you're buying because it's a corporate
bond.
Last
year, when the Fed hinted that it was
going to stop buying
bonds, tapering its quantitative easing,
bond yields jumped nearly 2 % points in just a few days.
If the 10 -
year yield goes above 2.63 %, however, he thinks it would be a «big deal» that could accelerate the
bond sell - off.
Ten -
year Italian
bond yields have risen 17 basis points to 4.55 percent, since the news of an uncertain outcome spread on Monday but the Italian treasury is
going ahead with a sale of 6.5 billion euros ($ 8.5 billion) of 5 and 10 -
year bonds on Wednesday.
«We've been trying to tell you that for ages and all these guys come on your show and tell you for four, five
years,
bond yields are
going up, they're
going to heaven and they never do.
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).
It's hard to believe it's just a few
years since countries like Ireland and Spain had to
go cap - in - hand to international lenders — at least if you look at their
bond yields.
A rise of 1 - 2 % isn't
going to do much, and I don't think we'll rise by more than 1 - 2 % on the 10 -
year bond yield anyway, so nobody needs to panic.
The
yield on the 10 -
year Treasury
bond climbed above 3 % for the first time since 2014, but of greater concern to many market participants were remarks in major corporate earnings reports suggesting that business conditions had likely hit their peak and were poised to deteriorate
going forward.
Since the September low point last
year US 10 - Year bond yields have risen 90bps, this compares to 125bps from the low point in July 2016 through to March 2017, or if you count it as one big move they've gone up 158
year US 10 -
Year bond yields have risen 90bps, this compares to 125bps from the low point in July 2016 through to March 2017, or if you count it as one big move they've gone up 158
Year bond yields have risen 90bps, this compares to 125bps from the low point in July 2016 through to March 2017, or if you count it as one big move they've
gone up 158bps.
Not to beleaguer the ongoing developments in the US
Bond markets, but while ten
years US
yield count on the Greenbacks measuring tape, the unwinding of the USD geopolitical risk premium
goes on and price action suggests we should expect... Read more
Even so, that doesn't mean mortgage rates will
go up because mortgage rates are more tied to the 10 -
year bond yield which has been declining due to all the risk in the markets.
-- 10
year yield back down to ~ 2.73 % — Is it possible that no chance that
yield can
go above 3 % as it would cause stocks to crumble and then rotation back to
bonds?
The importance of the 10 -
year Treasury
bond yield goes beyond the return on the instrument as it is used as a proxy for many other important financial matters, such as mortgages and investor confidence.
As we
went to press, top
yields for a handful of five -
year GICs were around 3 %, compared with less than 1.5 % on federal
bonds of the same maturity.
While short - term rates
went up three times in 2010, the
yield on 10 -
year bonds fell.
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 %.
And for several countries (Germany and Switzerland), their
yield on 2
years bonds went negative.
At the same time raising 5
year bond yield shows a raising mortgage interest rate (with qualifying rate
went up to 5.44 % already).
What do you think for next one
year, do you think
bond yield will
go up for next one
year and hence the FD rates?
The focus for financial market participants is on the
bond market, with the
yield on the 10 -
year Treasury note (the best market indicator of where mortgage rates are
going) approaching the crucial psychological threshold of 3.00 %.
Benchmark five -
year Government of Canada
bond yields have
gone up 17 basis points since the start of February.
To get any sort of real
yield in the current low rate environment, investors have been forced to
go out on the maturity ladder and into longer - dated
bond funds like the iShares Barclays 7 - 10
Year Treasury (NYSE: IEF).
As for
bonds and CDs, market watchers have been saying for upwards of seven
years now that
yields are
going to rise substantially.
The chart shows the pattern of
yields going back 46
years for the Fed funds rate, T - bills, the ten
year Treasury note and long maturity treasury
bonds.
Exhibit 3 shows the
yield for 5 - and 10 -
year nominal
bonds went down 30 bps and 54 bps, respectively, but we can see positive returns in the local indices.
As we
went to press on this issue of MoneySense, benchmark Government of Canada
bond yields were a paltry 2.5 % for 10
years and a downright miserable 1.7 % for five
years.
Meanwhile, the S&P Eurozone Investment Grade Corporate
Bond Index has seen its
yield rise only 1 bps in the past
year,
going from a
yield of 0.77 % to 0.78 %.
For instance, a 10
year AAA rated
bond yielding 2 % will
go down about 10 % if interest rates rise by 1 %.
For example, if you purchase a 10 -
year bond fund, and the
yield of that fund
goes from about 2 to 4 % in the next 5
years and the price
goes down 16 % in those same 5
years, your net annualized return over 10
years will be only about 1.7 %.
So if you bought a new issue 10 -
year bond at par
yielding 5 %, and now the market price is 98, this means that interest rates rose since you bought it (because the price
went down - the old «
bond prices move inversely with interest rates» saying).
No one is
going to buy a 10 -
year bond that
yields only 1 %, if instead they could loan that money out elsewhere for a similar period and get 3 % interest.
For the past
year, long
bond yields have
gone up and down, making a round - trip, but a lot higher than during late 2008.
A very nice couple recently told me that they were
going to put all of their money into a four -
year bond portfolio that supposedly will
yield 5 %.
So if you don't sell shares, and the markets don't
go down, then there are no draw - downs at all - just the opposite most of the time (in «normal times» - when
bonds actually
yield something - like they will in a few
years or so if interest rates keep
going back up to normal pre-meltdown levels).
For example, if a five -
year bond falls in price, this means the
yield (return for investors)
goes up.