Treasury Yields Hitting Brand New Lows After Ugly Data

ben bernanke

Photo: AP

Treasury yields are falling again today, with the 10-year yield hitting 2.47% at one point, due to the bonds themselves rallying. We’re now breaking new 2010 lows, and treasury sceptics (including yours truly) are looking silly once again.Note this comes as many market participants are taking another round of quantitative easing from the Fed for granted.

If you’re an investor who needs yield with decent long-term principal protection, large cap stable businesses with dividends seem like the far safer long-term bet in our view given the long-term inflation and rising interest rate risk treasuries are exposed to

Yet if you’re truly wed to government bonds, then at least buy the actual bonds individually rather than a bond fund, because bond funds don’t buy and hold, thus your principal isn’t guaranteed to be repaid with them. Thus these funds which invest in ‘risk-free’ bonds could be slammed by even a small increase in interest rates.

Today’s move for the 10-year yield:

Chart

A longer-term perspective, we’re at 2010 lows:

Chart

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