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Not even amidst the panic of late 2008 have 10-year Treasury yields closed the year below 2%,...

Not even amidst the panic of late 2008 have 10-year Treasury yields closed the year below 2%, but - barring a big move - that will change today. The 10-year is off another 4 basis points to 1.86%, not far from the 1.70% of late September when fear in equity-land was palpable. Treasurys have handily beat stocks this year, the 10-year returning 9.7% (as of Thursday), the 30-year returning more than 30%.
Comments (5)
  • bones2180
    , contributor
    Comments (48) | Send Message
     
    And every stock guy on tv was saying bonds were not the place to be for the retail investor, look who's laughing now
    30 Dec 2011, 12:20 PM Reply Like
  • DVW
    , contributor
    Comments (157) | Send Message
     
    Anyone locking up their money for 10yrs at 1.86% is crazy.
    30 Dec 2011, 04:59 PM Reply Like
  • jadziasman
    , contributor
    Comments (93) | Send Message
     
    Fear of debt default in the eurozone is driving treasury prices higher (and yields lower). Greek 2 yr bonds as of 12-30-11 have an effective yield of 135% and have been as high as 150% in late 2011. This is REALLY unsustainable. The 50% haircut "promised" in the fall for Greek bonds is overdue. What is the troika waiting for?

     

    Until the eurozone debt crisis abates, investors will continue to park their money in Treasuries. Don't be surprised if 10 yr treasuries briefly yield 1% if the eurozone unexpectedly implodes.
    30 Dec 2011, 06:09 PM Reply Like
  • User241885/(FAMCO)
    , contributor
    Comments (240) | Send Message
     
    This will be the third year in a row to completely defeat the chicken littles who have been whining about bond bubbles. Like the comment above by DVW, for the last 36 months we have had to listen to the transaction-addicted brokerage community try to convince people that "they would have to be crazy to invest in Treasuries when the yield is only 4%, only 3% and now only 2%." Ooops.

     

    For three years the "bond bubble" noise has been deafening. My hat is off to the investors, advisors and fiduciaries who, when advised that it was time to dump their Treasuries and buy stocks, instead hung onto to their Treasury positions in the face of so much bad advice.

     

    Given the world events of the last three years, it has not been that difficult to understand the value of safety. The market has rewarded those who get it.

     

    Happy New Year.

     

    FAMCO
    31 Dec 2011, 08:59 AM Reply Like
  • DVW
    , contributor
    Comments (157) | Send Message
     
    FAMCO - Here's the problem... govt bonds are safe until they arent anymore. Nobody knows when that'll be, but mathematically it will happen. I can feel relatively confident enough to bet that a world in 10 years is going to yield more than 2%. It's a game of confidence, and when that's lost, bonds are an awful place to be, especially if you're locked in for a decade.

     

    Govt bonds are extremely risky at this point. You can take nearly all the commentary about them being safe and secure and liable to keep going up and overlay that with the same rhetoric of the housing market, tech market or gold market before they broke.

     

    As for me, 2% doesnt compensate me for the mathematical risk of T bonds, and I get get better returns elsewhere at less risk and shorter maturity.
    1 Jan 2012, 08:50 AM Reply Like
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