Insights + Resources

It’s All About Bonds

Apr 12, 2021

Bonds go up
Long bond yields may increase for several reasons

There’s an old Wall Street maxim that says, “markets climb a wall of worry.” And these days, there’s plenty to worry about with the trend in long-term interest rates and bonds.

The 10-year Treasury yield in recent weeks moved above 1.75% (the highest in 14 months), and the 30-year Treasury topped 2.5% for the first time since August 2019.1

The yield on long bonds may increase for several reasons, some of which may be good—strong economic growth—and some concerning, a potential pick up in inflation.2

Meanwhile, at its most recent policy meeting, the Federal Reserve decided to leave interest rates unchanged. The Fed also restated its commitment to no short-term interest rate hikes through 2023.3

In the interest-rate tug of war, both sides appear to be holding their own. The Fed is keeping short-term rates steady while long-term rates are trending higher due to market forces.

Fed Chair Powell said that he anticipates inflation rising this year. But he believes the price increases will be temporary, with inflation staying within the Fed’s 2% target for the next several years.3

The Federal Open Market Committee projected that the economy would grow 6.5% this year, a sharp improvement over its previous estimate of a 4.2% gain. The forecast for the unemployment rate by year-end is 4.5%, down from its prior forecast of 6.2%.3

You’re likely to hear phrases like “market dislocation” or other buzzwords as pundits explain what’s happening in the bond market. But know that we’re keeping a close eye on the markets and are evaluating opportunities as events continue to unfold. In the meantime, please reach out if you have any questions.

For more insights and resources, be sure to sign up for our Weekly Market Commentary. Follow our YouTube channel where we regularly post our Epic Market Minute videos. Follow us on LinkedIn, or like us on Facebook. And as always, please don’t hesitate to reach out to a dedicated service professional at Epic Capital.

Tags: ,

More Insights

Jul 22, 2021

The news keeps getting better for Social Security recipients. It’s now projected that benefits will increase 6.1% in 2022, up from the 4.7% forecast just two months ago. That would be the most significant increase since 1983.1,2

Jul 21, 2021

Inheriting wealth can be a burden and a blessing. Even if you have an inclination that a family member may remember you in their last will and testament, there are many facets to the process of inheritance that you may not have considered. Here are some things you may want to keep in mind if … Continue reading “Coping with an Inheritance”

Jul 19, 2021

It’s long been an aspirational target for entrepreneurs. It literally goes beyond “blue sky,” in terms of location, to a place no business has gone before: Outer Space! The name of the game is commercial space travel.

Jul 16, 2021

With all the attention given to inflation, stock prices, and job reports, it’s been easy to overlook the remarkable move in the bond market during the past few months as bond yields have fallen. The yield on the 10-year treasury closed at 1.37% on Friday, July 9, down from its 2021 high of 1.74% in … Continue reading “The Quiet Fall in Bond Yields”

Jul 14, 2021

On July 6, oil prices reached a six-year high of $76.98 a barrel. This benchmark came as the Organization of the Petroleum Exporting Countries (OPEC) and allies failed to reach an agreement regarding an increase in production.1 This rise in cost follows a year in which OPEC and allies cut production amidst the COVID-19 pandemic. … Continue reading “Oil Prices Hit Six-Year High”

Insights + Resources >