10 year @ 2.42% as of 10/24

hank

That’s still very low by historical standards. But quite a jump from around 2 or 2.2% of only a couple months ago. While I have little exposure to longer dated bonds (mostly through allocation funds) I’ve been feeling the hit with 0% daily gains lately while the major stock averages go slap-happy.

If rates tick much higher I’ll give in and buy a little of a GNMA fund thinking there will be some potential long range appreciation without the risk equities pose. Not something I’d suggest to someone in the accumulation stage. But for some of us oldsters it will become more tempting as a way of preserving capital as rates edge higher and stocks soar to daily highs. With GNMAs you get government backed paper with lower “duration risk” because homeowners stop refinancing and hang on to their existing fixed rate mortgages longer. At over 2.5% on the 10-year I become somewhat interested.

Old_Skeet

Hi @hank,

Yep, yield has gotten thin these days as I remember the 10 yr at about ten years ago, or so, around 5%. And, I was knocking better than a five percent yield out of my five step CD ladder with maturities from 1 to 5 years. And, I also remember back in the 80's 15% on the 10yr. Today 2.42% (but rising).

Old_Skeet

hank

Thanks @Old Skeet for your thoughts. Looks like 10-year did hit 4% just 2 or 3 years back. Not a screaming buy now for sure. I was just thinking out loud with the original post. If I were to succumb to the temptation, guess the best way would be to gradually move some shorter duration bond holdings into GNMAs. Likely rates would continue up for a while.

Derf

Gentilemen: I don't know how your portfolios did on this up day ? Mine was stuck in the mud. Even Steven at best
Derf

hank

@Derf - Ditto on the mud. Any fund with exposure to bonds (think allocation and balanced) was hurt by rising rates. Funds with exposure to real assets (think real estate and gold) probably suffered too. The indexes aren’t telling the whole story. Not just today. Been like a “broken record” now (very old expression) for several days.

Provided your (or your fund’s) bond exposure isn’t way out on the long end, there should be rewards in coming months in the form of higher dividends.

Charles

Five year CDs going for 2.5% ... ten year 3.0%. Highest in a while!

Here's latest from Schwab:

catch22

Morn'in coffee to y'all,

A few related reactions from recent upward yield blips.

Don't be confused with the "first" chart graphics, as these are yield numbers for the 2, 10 and 30 year Treasury issues; and are not performance numbers.
This particular chart begins with 1999 through October 24. You may "hover" the mouse or pointer upon any point on a line to view the "yield" for that date area.

The current upward move in yield for all 3 began about September 7.

http://stockcharts.com/freecharts/perf.php?$UST2Y,$UST10Y,$UST30Y&n=4698&O=011000

The current upward yield shift beginning about September 7 as reflected in these performance returns of SHY , IEF and EDV .....

http://stockcharts.com/freecharts/perf.php?SHY,IEF,EDV&n=34&O=011000

..... And for these FCBFX , PONDX , FGMNX and BREFX

http://stockcharts.com/freecharts/perf.php?FCBFX,PONDX,FGMNX,BREFX&n=34&O=011000

'Course, all of these yields are subject to continuous surprises or other, eh?

One may presume there will be "x" number of investment grade bond purchases, by domestic and foreign investors, which includes pension funds, sovereign wealth funds, central banks and other; if the equity markets or other debt issues begin to have serious problems, one could expect U.S. Treasury related issues to be one of the major risk off areas for "money on the run".

Take care,
Catch