The energy sector has been outperforming for the past few months, predominantly down to higher oil prices, and we're starting to see bond
yields move higher.
That could mean
yields move higher in fits and starts.
With respect to interest rates, we continue to see a bifurcation for U.S. rates where shorter - dated
yields move higher in response to possibly two or three more Fed rate hikes, while the U.S. Treasury 10 - year yield trades in a 2.25 percent to 2.75 percent range, with a temporary move toward 2 percent possible if geopolitical risks become realities.
The findings: Traditional defensive sectors such as utilities, telecommunications, real estate and consumer staples provided minimal protection when nominal
yields moved higher.
A number of Canadian lenders boosted their five - year fixed term mortgage rates as bond
yields moved higher following Donald Trump's election win south of the border.
Since low interest rates generally go hand - in - hand with a weak economy, why were Treasury
yields moving higher, and what might this mean for mortgage rates?
If bond
yield moves high, then interest sensitive stocks go down while financial stocks go up, and vice versa.
The loudest voices telling stock investors to worry about ten - year
yields moving higher from two percent said the opposite when rates were moving down to two percent.
Not exact matches
«If U.S. rates
move too quickly, they will dislocate [
high yielding] assets more broadly and the most liquid emerging markets will not be immune to a selloff,» he added, pointing to the 2013 taper tantrum as an illustration of this idea in action.
NEW YORK, May 2 - U.S. stocks edged
higher while the dollar and Treasury
yields fell on Wednesday after the Federal Reserve held interest rates steady and said inflation had «
moved close» to its target.
(Bond
yields move inversely with bond prices, and rising
yields tend to signal expectations of
higher growth and inflation ahead and, therefore,
higher interest rates.)
The
yield on the U.S. 10 - year Treasury jumped to its
highest level since 2014 on Friday morning, underlining a wider
move in bond markets caused by central banks
moving away from financial crisis policies.
NEW YORK, May 2 (Reuters)- U.S. stocks edged
higher while the dollar and Treasury
yields fell on Wednesday after the Federal Reserve held interest rates steady and said inflation had «
moved close» to its target.
The rise in Treasury
yields leaves them at the
highest since mid-2014 though the
move had been paused in Europe as lower - than - forecast early German inflation numbers had nudged its borrowing costs lower.
«We increasingly see signs that the
high yield deterioration is
moving past energy related markets.
«Hence, the fear of deflation driven by an acute oil price collapse receded, allowing bond
yields to
move higher,» he added.
10 - year
yields on Austrian government bonds — and indicator of stress on the country — are
moving sharply
higher this morning.
In a presentation earlier in September, Gundlach said that interest rates around the world had bottomed and he expected both rates and bond
yields to
move higher.
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.
The
yield on the benchmark 10 - year Treasury notes, which
moves inversely to price, was
higher around 2.398 percent, while the
yield on the 30 - year Treasury bond held near 3.002 percent.
LONDON / ABIDJAN, May 1 (Reuters)- Ivory Coast's
move to halt the distribution of
high -
yielding seeds and other advanced tools to cocoa farmers could pave the way for problems regarding quality, more erratic production and the spread of diseases, industry sources warn.
One «canary in the coal mine» could be a
move further away from
high -
yield bonds and into investment - grade fixed income.
Bond
yields snapped
higher, adding to their already steep gains, and federal funds derivatives showed market expectations are
moving closer to pricing in a full three interest rate hikes by December.
They have also increased the cost of new fixed - rate mortgages as
yields on the bond market have
moved higher.
That
yield was
moving higher again Tuesday, when the stock market swung back to the positive.
* Ivory Coast's
move to halt the distribution of
high -
yielding seeds and other advanced tools to cocoa farmers could pave the way for lower quality, more erratic output and the spread of diseases, industry sources warn.
The firm's rates - strategy team says a «slow unwind of globalization» means
yields will
move higher in the medium to long term.
The market's price action since late January hasn't been inspiring, and with bond
yields up, commodity prices
higher and sharp price
moves among equities, it might be time to break out the bear suit.
All in all, we believe eurozone bond
yields may
move a little
higher, but any increase is likely to be capped by the ECB's ongoing level of purchases, at least until policymakers start to signal their next steps on monetary policy later in the year.
But keep in mind: More interest rate sensitive bonds generally have
higher yields, so
moving to a shorter duration investment could result in less income.
Citigroup analysts expect a Trump victory would send Treasury
yields higher and steepen the curve, though
yields have been
moving lower in a safety trade.
However, keep in mind that the first
move higher following a substantial market correction does not generally
yield stellar results because new leadership in the stock market is just becoming established.
«You're seeing the equity market
move higher and the Treasury
yields climb just a bit.»
The
move came as bond
yields surged
higher.
Given the overall
high yield of my portfolio, looking towards some more growth oriented payers is something I'm looking towards
moving forward with this portfolio.
Still, as a
high yielding stock this may be one to keep for a limited time as many dividend growth investors are looking to jump start their current income and then
move into lower
yielding,
higher quality and
higher dividend growth stocks.
«Every time the bond market
moves dramatically and unexpectedly
higher in
yield, the consensus forecast plays catch - up,» says Matthew Hornbach, Global Head of Interest Rate Strategy for Morgan Stanley Research.
The leveraged loan market just achieved something it hasn't been able to do since 2008 —
moved within $ 100 billion of the U.S.
high -
yield bond...
Savers hoping for
higher interest rates on deposit accounts are probably going to have to wait awhile longer for
yields on their savings to
move upward.
Rick Rieder: So I think people — the benchmark 10 - year, the 3 % that people are looking at, there's a lot of focus on — I think it's a big deal, but I think it's a big deal that
yields are
moving higher.
A recent fear for
high yield investors has been the prospect of normalising interest rate policy in developed markets — historically low interest rates have made the
high yield market more sensitive to interest rate
moves and effectively managing this risk will be important.
For those investors who are
moving funds into fixed income investments, they have the potential to benefit from lower prices and
higher yields.
Market participants are looking forward to getting their first major reading on earnings from the biggest technology - sector players in the coming days, but for now, investor sentiment has been able to overcome what would ordinarily be a troubling rise in long - term bond
yields that could signal a steeper
move higher for interest rates in the near future.
And what could be lower dividend growth
moving forward (relative to that big 10 - year DGR) is compensated by a relatively
high yield of 2.97 %.
With interest rates on low - risk investments falling to low levels in many countries, investors have sought to maintain
yields by
moving into
higher - risk assets such as corporate debt and emerging market debt.
For roughly three decades, U.S. non-financial corporate debt as a percentage of U.S. nominal GDP and the
high yield default rate
moved in tandem.
While it's unlikely that the rising trend in
yields will be broken, a correction is in the cards after the strong
move higher in rates.
The report always has market -
moving potential, but it may carry some extra weight this time around considering Treasury
yields aren't far off from multi-year
highs.
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 %.
High yield, however, has had big
moves.