Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 
 
Blog Home
Bob Carey
Chief Market Strategist
Bio
X •  LinkedIn
 

  A Snapshot Of Bond Valuations
Posted Under: Bond Market
Supporting Image for Blog Post

 
View from the Observation Deck  
  1. Today's blog post is one we do ongoing so that investors can monitor fluctuations in bond prices relative to changes in interest rates. The dates in the chart mark some recent posts.  
  2. Since 4/7/20 (green bars in chart), the Federal Reserve ("Fed") has kept the federal funds target rate (upper bound) at 25 basis points (bps). 
  3. For the 30-year period ended 1/8/21, the federal funds target rate (upper bound) averaged 2.69%, according to Bloomberg.
  4. With respect to the Fed's guidance on monetary policy, it stated that it expects to hold short-term interest rates near zero until two things happen: (1) the U.S. unemployment rate is back to normal, or around the 4.0% level, and (2) having achieved an inflation rate at or above 2.0%, according to Brian Wesbury, Chief Economist at First Trust Advisors L.P. The Fed believes it could keep the federal funds target rate near zero through 2023.  
  5. The yield on the benchmark 10-year Treasury note (T-note) rose from 0.71% at the close on 4/7/20 to 1.12% at the close on 1/8/21, or an increase of 41 basis points, according to Bloomberg. Brian Wesbury, Chief Economist at First Trust Advisors L.P., believes that the yield on the 10-year T-note will close 2021 at around 1.40%. 
  6. For comparative purposes, here are the closing yields as of 1/8/21 for the indices featured in the chart: 3.76% (U.S. Leveraged Loan 100); 4.96% (U.S. High Yield Constrained); 3.50% (22+ Yr. Municipal Securities); 4.25% (Fixed Rate Preferred Securities); 0.96% (7-10 Yr. U.S. Treasury); 1.13% (Freddie Mac Mortgage); 1.96% (U.S. Corporate ); and 1.50% (Global Corporate), according to Bloomberg. 
This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The ICE BofA 22+ Year U.S. Municipal Securities Index tracks the performance of U.S. dollar denominated investment grade tax-exempt debt publicly issued by U.S. states and territories, and their political subdivisions with a remaining term to maturity greater than or equal to 22 years. The ICE BofA Fixed Rate Preferred Securities Index tracks the performance of investment grade fixed rate U.S. dollar denominated preferred securities issued in the U.S. domestic market. The S&P/LSTA U.S. Leveraged Loan 100 Index is a market value-weighted index designed to measure the performance of the largest segment of the U.S. syndicated leveraged loan market. The ICE BofA 7-10 Year U.S. Treasury Index tracks the performance of U.S. dollar denominated sovereign debt publicly issued by the U.S. government with a remaining term to maturity between 7 to 10 years. The ICE BofA U.S. High Yield Constrained Index tracks the performance of U.S. dollar denominated below investment grade corporate debt publicly issued in the U.S. domestic market. The ICE BofA U.S. Corporate Index tracks the performance of U.S. dollar denominated investment grade corporate debt publicly issued in the U.S. domestic market. The ICE BofA Global Corporate Index tracks the performance of investment grade corporate debt publicly issued in the major domestic and Eurobond markets. The ICE BofA Freddie Mac Mortgage Backed Securities Index is a subset of the ICE BofA U.S. Mortgage Backed Securities Index including all generics representing pools issued by Freddie Mac.

Download a PDF of this post, please click here.
Posted on Tuesday, January 12, 2021 @ 1:11 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
MARKET ANALYSIS
Market Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email
 


 PREVIOUS POSTS
A Snapshot Of How Stocks Have Performed So Far In This Millennium
The Only Constant Is Change
Commodity Prices Rising As The U.S. Dollar Falls
A 20-Year Snapshot Of Bond Yields
The Pop In Treasury Returns Likely Not Sustainable
A Snapshot of Growth vs. Value Investing
A Snapshot Of Top-Line Growth Projections
Homebuilder-Related Stocks Have Finally Surpassed Their 2005 Peak
Betas Can Help Match One’s Equity Holdings With One’s Risk Tolerance
A Snapshot Of The S&P 500 Index Earnings Beat Rate
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.