Later in the afternoon, US equities finished a tad lower (S&P -5 to 2630), while the 10 -
year yield remained steady around 2.95 %.
Into the afternoon, US stocks turned positive (S&P +8 to 2675, telecom and utilities lead gainers), while the 10 -
year yield remained steady around 2.96 %.
During the late morning and into the afternoon, equities continued to climb (S&P +30 to 2676), while the 10 -
year yield remained below 3 %.
The US 10 -
year yield remained firm between 2.97 % - 2.99 %, and the DX reached 90.95 (3 - month high).
With unemployment reports possibly growing and housing data reigniting, ten -
year yields remained at 1.81 percent.
«The 10 -
year yield remains entrenched in the consolidative range,» Marty Mitchell, an independent rates strategist and formerly head government bond trader at Stifel Nicolaus & Co., wrote in a report Wednesday.
Not exact matches
The central bank said it will purchase Japanese government bonds so that the
yield on the 10 -
year note will
remain at around zero percent.
The U.S. Federal Reserve's gauge of inflation
remains stubbornly below its 2 percent target, but U.S. 10 -
year Treasury
yields spiked to near four -
year highs in January as a bond sell - off gathered steam.
Assuming they and insurance companies buy as much as JP Morgan and others estimate, long - term
yields may not rise at all this
year and
yield curves will
remain flat.
«Net short positions on 10 -
year Treasury notes are at historical highs, implying that rising US bond
yields remains among hedge funds» major convictions.»
The 10 -
year U.S. Treasury
yield hurdled 3 percent last week and
remains close to that level, encouraging investors to buy the dollar.
Economic factors like consumer confidence, financial obligations, and delinquencies are all improving and the consumer may be more insulated than investors think from a back - up in
yields, given 75 % of their financial obligations are in the form of a mortgage, close to 90 % of all mortgages are 30 -
year fixed, and the average mortgage is termed out at the lowest rate ever... Taking these factors into account, we generally think it pays to
remain sanguine.»
Notice that 30 -
year yields (red) have dropped from 3.9 percent to below 3 percent; however the
yield on the 5 -
year note has
remained elevated.
Concern
remained over higher bond
yields after the
yield on the U.S. 10 -
year Treasury breached 3 percent level on Tuesday, making equities relatively less attractive.
SHYL tracks an index of USD - denominated high -
yield corporate bonds with 0 to 5
years remaining to maturity.
Although rates have popped from recent lows, it's possible that higher
yields remain range - bound in the months (
years?)
Over the past
year, the bond
yield curve has been positive but flattening (short - term
yields remained lower than long - term
yields, but the differential has narrowed).
High -
yield bonds are in the eighth
year of an investment cycle that has seen assets under management grow threefold, to $ 300 billion, so interest among investors
remains high.
Japanese shares hit a two - month closing high on Tuesday with financials leading gains after U.S. bond
yields spiked to four -
year highs and as investors
remained optimistic about upcoming earnings.
While investors appear more convinced that the Federal Reserve (Fed) will indeed hike rates later this
year, real
yields remain well below where they started the
year and even further below their long - term average.
Thus far in 2015, the performance of the Dogs of the Dow has not been particularly inspiring, with the 10 highest -
yielding Dow components at the start of the
year up 5.0 % in February, versus a 5.7 % increase in the overall Dow and a 6.1 % jump in the
remaining 20 companies that make up the Dow Jones Industrial Average.
In bonds, the Market Climate
remains characterized by unfavorable valuations and unfavorable
yield pressures, holding the Strategic Total Return Fund to a duration of less than 1
year.
For one thing, 10 -
year yields elsewhere in the world
remain significantly lower, which is to say that global investor demand for U.S. notes should hold steady.
Yet the currency is likely to
remain weak as zero - anchored Japanese 10 -
year bond
yields encourage local investors to buy higher -
yielding foreign bonds.
While rates
remained constrained, I had expected the
yield on the 10 -
year Treasury note to end the
year between 2.5 percent and 2.75 percent, not 2.25 percent.
As new programs come on line and
yields continue to improve, we
remain optimistic about the second half of the
year.»
The main exception to this global pattern has been Japan, where 10 -
year bond
yields have
remained remarkably stable, generally trading in the range between 1.7 per cent and 1.8 per cent so far this
year (Graph 8).
The continuing low level of government bond
yields has supported the search for
yield that has been evident over the past couple of
years, with the spread between
yields on US government debt and
yields on both corporate and emerging market debt
remaining around historical lows over the past three months (Box B).
Bonds have been in a bull market for 35
years and
yields, though off their 2012 lows,
remain at historic extremes.
While
yields remain near historic lows, they are widely expected to go up next
year as the Federal Reserve continues raising rates to keep the economy from overheating.
Yields on 10 -
year US government bonds have
remained within a relatively narrow range around 4.2 per cent over the past three months.
Notwithstanding this rise, bond
yields in Japan
remain at historically low levels, with 10 -
year yields at 1.8 per cent.
Even though the
yield - to - maturity for the
remaining life of the bond is just 7 %, and the
yield - to - maturity you bargained for when you bought the bond was only 10 %, the return you have earned over the first 10
years is an impressive 16.26 %!
The downside for investors, if a high
yield bond is called, is the loss of interest return for the
years remaining in the life of the bond.
• Excellent on certain dividend categories, including 43 straight
years of increases, low payout ratio, and highest
yield ever available • Declining number of shares over the past 10
years makes each
remaining share worth a higher percentage of the company.
Short term interest rates
remain near zero, 10 -
year bond
yields have declined below 2 %, and our estimate of 10 -
year S&P 500 total returns has declined to just 1.4 % (see Ockham's Razor and the Market Cycle for the arithmetic behind these historically - reliable estimates).
- Applying a 3.5 x revenue multiple to WU.com, which is a discount to Xoom's 4.8 x revenue takeover multiple, and 15x EV / FCF to WU's
remaining businesses (retail C2C, C2B, and B2B), which is a substantial discount to MoneyGram's 21x EV / FCF takeover valuation, they derive an intrinsic value estimate of ~ $ 33 per share for WU at the end of 2020, offering ~ 72 % upside, or a 3.5 -
year IRR of ~ 20 % including the dividend (3.7 % current
yield).
The conditions have fueled a rally in Portugal's sovereign bonds so far this
year, although they
remain the second - highest
yielding bonds in the eurozone, behind those of Greece.
This method provides a real
yield for a 10
year maturity, for example, even if no outstanding security has exactly 10
years remaining to maturity.
An alternative, and perhaps more likely, interpretation is that the market expects that the target cash rate will
remain below its average over recent
years for some time, and this expectation is reflected in bond
yields.
The Treasury market initially
remained fairly resilient to this reversal of sentiment, but by early March benchmark
yields had reached their highest level so far this
year, ahead of the Fed's confirmation of its decision to raise interest rates.
The
yield curve
remains inverted, with short - term Treasury three - months bills
yielding 5.045 percent Friday, compared to 4.648 percent on 10 -
year Treasury notes.
The subsequent improvement in market sentiment has restored the
yield curve to a shape similar to that in early May; this has long
yields above the cash rates, though
yields on 2 -
year bonds
remain around the cash rate.
Longer - term inflation expectations of investors have been similarly subdued; the difference between 10 -
year bond
yields and indexed bonds continues to fluctuate within the 2 — 2 1/2 per cent range it has
remained in since mid last
year.
With the outlook for growth in the euro area
remaining fairly subdued, German bond
yields are now below those in the US after having been around 30 basis points higher for much of the past
year.
If issuance
remains low as expected, the value of triple - A rated muni
yields relative to 10 -
year Treasuries should compress by five to ten basis points, from the current 82 - 85 % to 72 - 75 % of the 10 - yr Treasury
yield.
Oil - which rallied sharply off of Netanyahu's comments yesterday regarding Iran - pulled back to $ 67.73, while the US 10 -
year bond
yield remained steady between 2.951 % - 2.963 %.
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.
Expectations of inflation, as measured by the difference between nominal and indexed 10 -
year bond
yields,
remain at around 2.3 per cent.
All in all, the combination of these services and a strong interest rate mean that CIT Premier High
Yield Savings remains our choice for best high - yield savings option for another
Yield Savings
remains our choice for best high -
yield savings option for another
yield savings option for another
year.