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Current 10-year U.S. Treasury Bond (TNX) rates are close to nine month highs from the low we witnessed in late July 2012 of 1.38%. Should this be considered a trend change or buying opportunity?

My intermediate term target for the 10 year Treasury interest rate is to rise to between 2.25-2.50%. Much higher than that and it starts to put downward pressure on our already fragile economy, since consumer and mortgage loans would begin to adjust higher.

Companies that regularly issue debt on the open market would also be forced to borrow at higher rates. This could in turn cause the Federal Reserve to leap into action with an even greater amount of Treasury and mortgage-backed security purchases.

The gentle rate rise has caused almost all highly rated investment grade bonds that carry a spread to Treasuries, such as agency mortgage-backed, corporate, and municipal issues, to post lackluster performance during the period.

I have welcomed this underperformance since I think it has begun to work off many long overdue excesses in areas of the bond market. Pockets of value are beginning to materialize, and one of my favorite sectors for income investors is emerging market corporate bonds. I especially favor politically stable countries that house companies with low overall indebtedness, high growth, and chances for improving credit fundamentals.

I think this recent pullback is going to be short lived, especially in areas of the market that are already beginning to present good relative yield and value. My favorite ETF for exposure to this space is the actively-managed WisdomTree Emerging Markets Corporate Bond Fund (NASDAQ:EMCB).

Source: Interest Rates - Trend Change Or Buying Opportunity?