Why Do Short-Term Bonds Yield More Than Long-Term Bonds? Who Would Buy Long-Term Bonds Now?

A couple astute observers noticed something about interest rates in my last video. If you missed that video, it can be found here.

Click on the image below to watch today’s short video answering the questions about why short-term rates are higher than long-term rates, who would buy long-term bonds in this scenario and what else does an “inverted yield curve” tell us about the economy? This one is a bit more casual as I wasn’t expecting to make a video today and threw it together fairly quickly. You’d be amazed at how much time goes into even a short video like this!

Enjoy!

 

 

 

 

 

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Quick Follow-Up to “Bonds Haven’t Been Here…”

Last week I mentioned yields on Treasuries hitting (or even exceeding) 4% now. So, let’s bring this full circle.

Two weeks ago I wrote a note titled, “No, Stocks Are Not Cheap Yet.” And in that note I provided a range of returns for the U.S. stock market over the next twelve years under a variety of good, average, and bad conditions (see below).

 

The range of returns from this analysis was -5.4% to +3.5% annualized. That means even an optimistic case for U.S. stocks (at least for the conditions in the matrix above) is about a 3.5% annualized return over the next 12-years with an average expected return of about 0%. Continue reading “Quick Follow-Up to “Bonds Haven’t Been Here…””

Bonds Haven’t Been Here In Over A Decade (And the impact on clients’ financial projections)

Last night the U.S. 10-Year Treasury yield did something it hasn’t done since 2010… it hit 4%.

Just two years ago the 10-year was yielding a measly 0.5%! It’s certainly been a wild, parabolic move in rates.

See chart below of 10-Year Treasury Rate since the eve of the Great Financial Crisis…

Continue reading “Bonds Haven’t Been Here In Over A Decade (And the impact on clients’ financial projections)”

First Trust: Stocks and Bonds Falling Together: What Happens Next?

Today I received a chart from First Trust with very interesting information.

The chart shows all the quarters since 1976 where stocks and bonds declined together and then provides forward return data for the subsequent 6 months, 1 year, 3 years after each event.

I’ll share the chart below then point out a couple things I find noteworthy. Click on the chart to expand…

Continue reading “First Trust: Stocks and Bonds Falling Together: What Happens Next?”