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Asset Management Viewpoints: Another Chance to Bite into Bonds

By Thomas O. Herrick
Chief Market Strategist, Managing Director

We have been here before. The back-up in yields since the onset of 2024 is giving investors another opportunity in bonds. There have been intermittent extremes in yields over the last year, most notably in early fall 2023 when the benchmark 10-year Treasury yield peaked at 5%. As bond price and yield move opposite, in early October we saw long duration Treasury ETFs trading at levels not seen since pre- Great Financial Crisis, 2007-2008. This was a massive, long-term, support low.

Following a huge rally from that low until year end 2023, which saw the 10-year close at 3.88%, we have experienced a sizable pull back in price with corresponding yield on the 10- year currently 4.60%. Yields are not going back to the ultra-low, post GFC dynamic of virtually zero. But investors can make volatility their friend in this type of market. While yields will not reach their post GFC extreme, there is ample room for them to move lower from today’s level. Lower yield means opportunity for price appreciation and locking in relatively high income. While the exact high is impossible to forecast, the odds favor a lower high in the 10-year relative to last year’s 5% mark.1

Bloomberg US aggregate price graph shows a dip in 2023, with the current reading at 87.99.
Source: FactSet 4/30/24 Economic or market performance information is historical and is not indicative of future results. Investing involves risks, including the potential loss of principal.

1 Bloomberg


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Fixed income investments have several other asset-class specific risks. Inflation risk reduces the real value of such investments, as purchasing power declines on nominal dollars that are received as principal and interest. Interest rate risk comes from a rise in interest rates that causes a fixed income security to decline in price in order to make the market price-based yield competitive with the prevailing interest rate climate. Fixed income securities are also at risk of issuer default or the markets’ perception that default risk has increased.


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