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1.90% 30 yr UST.....change notice, 1.00% w/.54% on 10 yr UST; "Welcome to the Twilight Zone"

From a Feb. 17 note I posted:
Our continued concern is what will become of the COVID19 virus and its impact on supply chain for various sectors. Tech. in particular could be an overwhelming favorite for profit taking.

***30 year bond yield dropped below 2%
We've maintained our tech. equity positions and of course, don't want to give money back; but some areas of tech. will be less impacted. Data crunching and related services should maintain, while some areas of the hardware providers may see problems from supply chain difficulties.

Investment grade bonds (U.S., more so for gov't issues) will have another nice pop today, if nothing changes with status reports for COVID 19; and in particular for my view is the virus and impacts into South Korea.

Those with portfolio exposure to long gov't. issues and especially directly exposed to the likes of: EDV, LTPZ, ZROZ will profit nicely. These 3 etf's however, travel at a fast rate in both directions; so hold on tight if you have monies here.

I'll add this yield chart that I use. The chart is for 1 year and is YIELD, not pricing. Hover the cursor on the chart lines for rate and date info.

Have a good remainder.
Catch

Comments

  • edited February 21
    Yes, I'm bumping this to add a link for those who may have an interest in COVID 19. The page link is a global map, that I have found to be "decent" with update periods, when compared to other sources. This is not the only such data map for this subject, but allows the viewer to move/drag and zoom the map; as well as clicking onto an area of interest to obtain data for a particular location and in many cases, a link to the source of the data.
    NOTE: I find the data may be one day behind in reporting; as is the case with South Korea.
    I going to monitor this periodically, with refreshing the map web page.

    COVID 19 DATA MAP

    Take care of you and yours,
    Catch
  • catch22: ...Those with portfolio exposure to long gov't. issues and especially directly exposed to the likes of: EDV, LTPZ, ZROZ will profit nicely. These 3 etf's however, travel at a fast rate in both directions; so hold on tight if you have monies here...

    Great post, especially this excerpted part.

    Agreed, if one must invest in bonds, one might as well invest in those making the most, which for some time now have been LT/LT Gov't, including stalwart WHOSX.
  • 8:25 A.M.
    --- Looked at markets last night before pillow time, and equity still looked shaky globally.
    I was surprised with market closes on Feb. 26, Wednesday; with the very flat and poor price performance of investment grade bonds in the U.S. gov't. area. I won't be surprised with what may be a problem with price performance in the corp. investment grade bond area, as corporations may be stressed for performance numbers at this point.....earnings dinged.
    Not that I.G. bonds are not offering downward protection against the uncertain equity markets; I merely expected more positive performance.
    Will be watching today (Fed. 27). as the pre-market yield numbers for the 30 year UST is 1.76% and the 10 year UST is 1.27%.

  • It's not what you look at that matters, it's what you see.
    Henry David Thoreau

    --- 30 year UST yield = 1.68% (3.09%, 2-28-19)
    --- 10 year UST yield = 1.16% (2.73%, 2-28-19)

    So, the spoken and written word here and there, remains; that bonds are overbought, a "who would want to own bonds with a yield of 1.16%"? This is true, if bond yields flat line at this yield or increase, eh?

    A variety of thoughts may be put forth as to why yields continue the downward path, in particular, since the 2008 market melt; although not a straight path.
    Past this, the overwhelming aspect is that when yields retreat, this is where the money is made from pricing. I do not dismiss that bonds are generally a balance to equity in a portfolio.

    The current global circumstance with COVID-19, it's reality, however large or small; continues to create anxiety on many levels.

    I expect many bond types to continue to move forward with "overbought".

    As for equity, perhaps oversold may not be finished.

    With both areas, I expect gyrations.

    Good evening,
    Catch

  • I have been watching this for several weeks since the virus news broke late December 2019. There is a fear that drive investors toward the safest asset, US treasury. This pushes down the yield while raises the price. Not sure if Treasury is over-bought or not, but the yield is declining steadily.
  • edited March 21
    *** Price check, aisle 3 !!! ***

    Already seems so long ago (Feb. 17), when I first noted that the 30 year T yield moved below 2%.

    Here we are in Never-Never Land in the world of bonds.

    I'll add this yield chart that I use. The chart is for 1 year and is YIELD, not pricing. Hover the cursor on the chart lines for rate and date info.

    A few views from bondland:

    Week / YTD

    --- MINT = -.02%/+.5% (Pimco Enhanced short maturity)
    --- SHY = +.7%/+2.2% (1-3 yr bills)
    --- IEI = +1.6%/+5.4% (3-7 yr notes)
    --- IEF = +2.8%/+9.5% (7-10 yr notes)
    --- TLT = +7.5%/+23.5% (20+ Yr UST Bond
    --- EDV = +10%/+31.4% (Vanguard extended duration gov't)
    --- ZROZ = +10.6%/+35% (UST., AAA, long duration zero coupon bonds)
    ***Other:
    --- LQD = +1.85%/+5.5% (corp. bonds)
    --- TIP =+2.1%/+5.2% (UST., inflation bonds, mixed duration)
    --- LTPZ = +7.1%/+17.9% (UST, long duration TIPs bonds)

    This chart is EDV vs SPY going back to December, 2007. TLT, EDV, ZROZ and LTPZ are hot potatoes in the bond arena. The chart, however; indicates the major inverse relationship to the U.S. equity market. When things are sour in equity land, these shine; but one must pay attention.

    Overall, in the past several weeks, investment grade bonds (U.S. gov't), notes and bills have helped a great deal to maintain a balance. Where a bond fund you may hold has it's holdings will be reflected with some of the above returns. A possible exception now and going forward may be in the corp. bond area; as many companies have large bond debt, some of which is borderline "good junk" , particularly if company earnings falter in this environment.

    Is there bond life after the 0% rate yield? Yes, from what I've followed with the German, 10 year Bund. Take a peek, here.

    Well, I've probably forgotten something that I really intended to mention. But, that is the purpose of the edit button.
    If you discover a mistake, please let me know. Chore time for this fellow, for a bit.

    Take care of you and yours,
    Catch

  • Stay tuned: The UST 10 year breached .5% yield, to .49% and the UST 30 year breached the 1% yield to .97%.

    ARTICLE

    This is the time, for those with cable access; to be able to stay up all night if you choose, as CNBC and Bloomberg will likely drop the info-mercial times and be business programming x 24 hours.
  • Howdy,

    From my above post (backwards 2 slots, March 7):
    Where a bond fund you may hold has it's holdings will be reflected with some of the above returns. A possible exception now and going forward may be in the corp. bond area; as many companies have large bond debt, some of which is borderline "good junk" , particularly if company earnings falter in this environment.
    --- LQD, mostly corp. bonds = -2.43% today
    --- FCOR, a Fidelity active mgd., mostly corp. bond etf, = -1.94% today

    Your bond fund return today, if not positive or a lower positive return than you expected may be related to the percentage of investment grade corp. and/or in combination with any high yield holdings, which generally were down today, at -4.5%.

    Take care,
    Catch
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