Tag Archives: bond yields
Paying Dividends: Measuring Rising Income against Declining Risks in the iBoxx Fixed Income Indices
With the ZIRP world1 firmly in the rear view, the “income” in fixed income is back. As yields collapsed to record lows, income-starved investors sought alternative sources of income such as dividend strategies, which attracted record flows in related products throughout 2022. Now, with investment grade bond yields hitting as high as 6%, bonds are…
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Increased Supply of U.S. Treasuries and Interest Rate Risk
Since March 2020, the federal government has enacted four pieces of legislation to assist businesses and individuals weather the economic downtown triggered by the COVID-19 outbreak. According to the Congressional Budget Office (CBO), these four pandemic-related laws are projected to increase the federal deficit by USD 2.2 trillion in fiscal year 2020 and by USD…
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Treasuries Market Flashes Red, Fed Unleashes Tsunami
As global financial markets grapple with assessing the economic impact of COVID-19, U.S. Treasury yields reached unprecedented levels. On March 9, 2020, the yield on the 10-year U.S. Treasury Bond fell to an intra-day low of 0.32%. This was a drop of more than 125 bps from just three weeks earlier. As market participants fled…
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With all the News of Higher Interest Rates, Don’t Forget About Floating-Rate Debt
The story line for a number of years now has been the “search for yield” and how the recent low-interest-rate environment has been forcing investors down in credit or out the maturity curve in an effort to maintain income though adding risk. Now that interest rates have begun reversing the low-rate environment, fixed-coupon securities may…
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Turning Point in Bond Yields
The ten year Treasury note closed with a yield over 2.5% this week, sparking talk that interest rates may have bottomed. The first chart shows the yield on the 10 year treasury going all the way back to 1953. As seen there, the bottom in July 2016 at 1.5%. Last March the yield was 2.5%,…
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U.S. Yield Curve Moved by Europe
The U.S. Treasury yield curve, as represented by the S&P U.S. Treasury Bond Current Indices, ended June 14, 2017, tighter (lower in yield) than the previous day. The importance of June 14 is that it was the day on which the U.S. Federal Reserve raised the target rate by 25 bps, from 1% to 1.25%. The following…
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Rieger Report: Infrastructure Bonds
With the President’s focus on the U.S. infrastructure this coming week it is a good time to look at the existing infrastructure bond markets. Municipal bonds have long played a critical funding role in the U.S. infrastructure sector. The 19,000 tax-exempt municipal bonds tracked in the S&P Municipal Bond Infrastructure Index mainly consist of investment grade bonds…
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Rieger Report: The World is Flat
There have been a myriad of articles with headlines and content about rising rates, the coming evisceration and other zombie apocalypse events in the bond markets. There can be no doubt that yields for fixed income asset classes are low and there is also no doubt that rates will eventually be higher. How, when and…
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Rieger Report: State G.O. municipal bonds have underperformed
Overall, general obligation bonds have underperformed revenue bonds over the last five years of low rates. State general obligation bonds have been the sector that is holding back returns as the lower yield and shorter duration characteristics of these bonds have resulted in muted returns in the up market. While revenue bonds have a larger foot print by par…
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No News, and No Implications
This morning’s Wall Street Journal reported, rather breathlessly, that “U.S. bond yields are topping a key measure of the dividends that large U.S. companies pay—a shift that has broad implications for investors….” The headline was triggered by the observation that the 2.50% “yield on the 10-year U.S. Treasury note…exceeded the 1.91% dividend yield on the…
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