Treasury rates [- where do they go from here?]

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Trance
Posts: 29
Joined: Sun Jun 12, 2022 12:11 am

Re: Treasury rates [- where do they go from here?]

Post by Trance »

Robot Monster wrote: Thu Jun 16, 2022 10:08 am I have no idea. But rates have had a tendency to move higher, and then down again. Maybe it's the end of that era. Dunno.

Image

Source: "Yes, But Which Yield Curve?" by Alfonso Peccatiello (Alf) link
That graph is shocking. What happens if this trend continues and goes negative? Can it? If that's a bad thing how can the fed reverse it?
Tom_T
Posts: 2689
Joined: Wed Aug 29, 2007 2:33 pm

Re: Treasury rates [- where do they go from here?]

Post by Tom_T »

dan916 wrote: Wed Jun 22, 2022 1:19 pm
ray.james wrote: Sun Jun 19, 2022 2:34 am VFISX _ vanguard short term treasury with 2.3 year maturity has YTM of 3%. In my view this is not bad. I see no more than 50bps upside from here. I would invest if not for the current market downturn which is enticing me to invest in other areas . EM bonds look very favorable to me. VWOB - dollar denominated emerging market government bonds are at 6%+ against a 4% coupon.
Why not just buy the 1 year T bill which is yielding about 2.8%?
Unless I'm not reading it correctly, on Vanguard, the yield on a 12-month bill is around 2.57% in the secondary market.

VFISX is yielding 1.84% I don't look at YTM because it's deceiving to me; I'm not getting 3% a year, I'm getting 3% total.
UpperNwGuy
Posts: 8081
Joined: Sun Oct 08, 2017 7:16 pm

Re: Treasury rates [- where do they go from here?]

Post by UpperNwGuy »

Tom_T wrote: Thu Jun 23, 2022 6:32 am
dan916 wrote: Wed Jun 22, 2022 1:19 pm
ray.james wrote: Sun Jun 19, 2022 2:34 am VFISX _ vanguard short term treasury with 2.3 year maturity has YTM of 3%. In my view this is not bad. I see no more than 50bps upside from here. I would invest if not for the current market downturn which is enticing me to invest in other areas . EM bonds look very favorable to me. VWOB - dollar denominated emerging market government bonds are at 6%+ against a 4% coupon.
Why not just buy the 1 year T bill which is yielding about 2.8%?
Unless I'm not reading it correctly, on Vanguard, the yield on a 12-month bill is around 2.57% in the secondary market.

VFISX is yielding 1.84% I don't look at YTM because it's deceiving to me; I'm not getting 3% a year, I'm getting 3% total.
I prefer to use the 30 day SEC yield for making these comparisons.
Robot Monster
Posts: 3976
Joined: Sun May 05, 2019 11:23 am

Re: Treasury rates [- where do they go from here?]

Post by Robot Monster »

Trance wrote: Wed Jun 22, 2022 7:13 pm
Robot Monster wrote: Thu Jun 16, 2022 10:08 am I have no idea. But rates have had a tendency to move higher, and then down again. Maybe it's the end of that era. Dunno.

Image

Source: "Yes, But Which Yield Curve?" by Alfonso Peccatiello (Alf) link
That graph is shocking. What happens if this trend continues and goes negative? Can it? If that's a bad thing how can the fed reverse it?
I have no idea where yields are headed, but if this is a concern to you, you can insulate yourself from interest rate risk as described in A bond duration glide path for retirement investing
KyleAAA
Posts: 9164
Joined: Wed Jul 01, 2009 5:35 pm
Contact:

Re: Treasury rates [- where do they go from here?]

Post by KyleAAA »

I predict the 10 year will peak between 5% and 6%.
typical.investor
Posts: 3287
Joined: Mon Jun 11, 2018 3:17 am

Re: Treasury rates [- where do they go from here?]

Post by typical.investor »

Trance wrote: Wed Jun 22, 2022 7:13 pm
Robot Monster wrote: Thu Jun 16, 2022 10:08 am I have no idea. But rates have had a tendency to move higher, and then down again. Maybe it's the end of that era. Dunno.

Image

Source: "Yes, But Which Yield Curve?" by Alfonso Peccatiello (Alf) link
That graph is shocking. What happens if this trend continues and goes negative? Can it? If that's a bad thing how can the fed reverse it?
Well, I’d say we are past peak globalization and it’s inflation reducing effect. Look at the EU and Japan if you want to see negative rates.
CC1E
Posts: 30
Joined: Tue Aug 22, 2017 7:45 pm

Re: Treasury rates [- where do they go from here?]

Post by CC1E »

I’m hoping for some early 80s style treasury rates! I’d buy all of the 10% 30 years treasury bonds that I could afford. Hopefully they’re non-callable this time.

If Wall Street and Main Street keep shaking off 75bps rate increases then inflation won’t be tamed anytime soon and I may get my wish to see some “shock and awe” from the FED. Though I’m not sure this FED has the backbone to do it.
Nutmeg
Posts: 303
Joined: Wed Jul 26, 2017 12:52 pm

Re: Treasury rates [- where do they go from here?]

Post by Nutmeg »

Northern Flicker wrote: Sat Jun 18, 2022 9:54 pm
dan916 wrote: Sat Jun 18, 2022 6:27 pm
Marseille07 wrote: Sat Jun 18, 2022 5:57 pm
dan916 wrote: Sat Jun 18, 2022 5:54 pm
Marseille07 wrote: Sat Jun 18, 2022 4:24 pm

Bonds are not safe. They may have appeared so because the yields were falling and disguised their true nature.

2 primary options:
a) hold bonds directly
b) shorten the duration
How would I buy municipal bonds directly? Im in highest tax bracket. I called VG and Fidelity and was told they do not do primary offering and I can only buy them on the secondary market.
I am not sure, I thought you were talking about US treasuries. Maybe you need to buy a bond fund for municipal bonds.
with fund i cant hold directly.
If ER is low, the treasury fund will have a higher expected return than treasury bonds you hold directly if duration is matched.
Could you please explain this statement in more detail? I am trying to understand this, as it seems to me that the return on a Treasury fund = the return of the same-duration Treasury - the fund ER.
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