Displaying items by tag: yields

Over the past two weeks, Treasuries have been considered a safe haven for investors amid the current turmoil in the banking system. While Monday offered a quick respite as investors learned of the news that UBS is rescuing Credit Suisse in a $3.24 billion deal, yields are expected to move lower in the days and weeks ahead if the turmoil continues. Kelsey Berro, a portfolio manager in J.P. Morgan Asset Management’s global fixed-income group told Barron’s that “The direction for Treasury yields should be lower." She added that “This month’s bank-related volatility shows that high-quality bonds are working as a portfolio diversifier this year.” Rick Bensignor, managing partner of Bensignor Investment Strategies concurs. He told Barron’s that he thinks Treasury prices will go higher, pushing yields lower. He says that he “Can see the 10-year Treasury’s yield falling to 3.2% or even 3.1%, compared with 3.48% on Monday afternoon.” Bensignor expects that “There will be more banks that are going to let us know how much trouble they are in. It’s going to force people into the safety of the bond market.”

Finsum:While Monday offered a brief respite, treasuries yields are expected to move lower if the upheaval in the banking system continues, according to bond strategists.

Published in Bonds: Treasuries

Investors poured into U.S government bonds Monday after last week’s collapse of Silicon Valley Bank. This sent Treasury yields plunging. The 2-year Treasury yield was recently trading at 4.06%, down 100 basis points or a full percentage point, since Wednesday. This marks the largest three-day decline for the 2-yield since Oct. 22, 1987, when the yield fell 117 basis points. That move followed the October 19th, 1987 stock market crash, which is also known as “Black Monday.” The yield on the 10-year Treasury was down just under 20 basis points. Prices soared and yields fell after news of the collapse of Silicon Valley Bank. Regulators took over the bank on Friday after mass withdrawals on Thursday led to a bank run. Regulators announced on Sunday that they would guarantee Silicon Valley Bank’s depositors. With fears of contagion across the banking sector spiking, investors looked to government bonds for safety. Investors are also rethinking how aggressive the Federal Reserve will be with rate hikes after the bank’s collapse. This helped to send short-term yields lower. The Fed is meeting next week and was expected to raise rates for the ninth time since last March. However, Silicon Valley Bank’s collapse may change that. Goldman Sachs certainly thinks so. The investment bank no longer thinks the Fed will hike rates, citing “recent stress” in the financial sector.

Finsum:After Silicon Valley Bank’s recent collapse, fears of contagion across the banking sector spread, driving investors into Treasury bonds, which sent yields tumbling.

Published in Bonds: Total Market
Tuesday, 07 March 2023 05:29

Someone say bonds, James?

Is there a little something something between bonds and James Bond?

Well, bonds, at least, are expected back this year, according to schwab.com

James? Filming a movie somewhere. Yeah, yeah; unreliable as ever.

Thing is, in the aftermath of an extended period of low yields -- not to mention last year’s to eagerly forget price dip, three tries at what’s on the precipice of a comeback: returns in the fixed income market, according to the site.

So, why so upbeat about returns? It goes like this:

Both nominally and in reality, starting yields are the highest in years;

The bulk of the Fed tightening cycle has wrapped up; and

A deceleration of Inflation’s likely

Following a prolonged dry spell, the bond market’s replete with yields that – compared to other investments – are appealing. A portfolio consisting of bonds; and high quality at that, like Treasuries, can translate -- without an excessively long period – around 4% to 5%.

Bonds, explained Ted Stephenson, professor of Accounting and finance at George Brown College, continue to be part of a diversified investment portfolio – an indispensable one at that, according to usnews.com.

"Regardless of correlation, bonds have done well versus stocks in six out of seven historical recessions. Ultimately, the correlation between stocks and bonds is not as important as relative performance."

Published in Bonds: Total Market

Several fund firms are looking to expand their fixed-income product lines to take advantage of the growing interest in the asset class. Fixed income had experienced a couple of turbulent years as the Federal Reserve's rate increases impacted yields and made equities more volatile. Plus, actively managed fixed-income mutual funds experienced one of their worst years on record in terms of outflows. However, the demand for fixed income this year appears to be gaining steam with several firms positioning themselves to take advantage of this trend. For instance, BlackRock has been rolling out new products to meet fixed-income demand. In January, the firm launched the BlackRock AAA CLO ETF, which has already taken in more than $30 million in assets as of Feb. 21st. Plus, last year, BlackRock launched a first-of-its-kind series of fixed-income ETFs that are designed to provide access to buy-write investment strategies on baskets of fixed-income securities. According to Steve Laipply, U.S. head of iShares Fixed Income at BlackRock, “The theme here is building out different tools for investors to navigate the environment so you continue to see this floating rate theme across the credit spectrum.” The firm is eyeing additional products in the future. Laipply also added that the industry will begin to get more creative when it comes to rolling out new products in the fixed-income space.

Finsum:After a couple of turbulent years, fixed-income funds are seeing increased demand, leading fund firms to take advantage of the trend by launching new products.

Published in Bonds: Total Market
Sunday, 19 February 2023 13:46

Why Fixed Income ETFs are Bouncing Back

Last year was a dismal year for fixed-income funds as bonds had their worst year on record. But this year, bonds are regaining steam partly due to an inverted yield curve. Fixed-income ETFs saw roughly $26 billion in inflows last month. Todd Rosenbluth, head of research at VettaFi, told Mike Santoli on CNBC’s “ETF Edge” that “There’s now income within the fixed income ETFs that are available. We’ve seen higher-quality investment-grade corporate bond ETFs. We’ve seen high-yield fixed-income ETFs see inflows this year, as well as some of the safer products.” For example, the 10-year Treasury yield was trading at 3.759%, while the yield on the 2-year Treasury rose to 4.644% on Wednesday. In addition, the yield on the 6-month Treasury hit 5.022%, its highest level since July 2007. With yields at their highest in decades and lofty stock valuations, investors are looking for areas of strength in the market. In the same ETF Edge segment, James McNerny, portfolio manager at J.P. Morgan Asset Management, added “When we break down the flows that we’re seeing, we’re seeing flows into higher-quality, longer-duration products, and credit products on the front end of the curve. Those have been the lion’s share of the majority of the flows that we’ve seen.” Jerome Schneider, managing director at Pimco, told CNBC “That fixed income funds are gaining popularity because they offer investors attractive yields in an uncertain economic environment.”

Finsum:With yields at their highest in decades, bond ETFs are seeing strong inflows as investors seek income in an uncertain economic environment.

Published in Bonds: Total Market
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