Rising yields: Is it time to invest in US treasury bonds or related funds?
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US Treasury bonds
Bond investors have been closely watching the yield on 10-year US Treasury bonds, which has been on the rise since August and recently hit a high of 4.354% before easing back slightly. As of last Monday, it stood at 4.328%, close to levels not seen in over a decade.
This sustained increase is largely driven by concerns over inflation, as well as uncertainty surrounding the Fed's monetary policy and the US government's budget deficit, which have led investors to demand higher yields for US Treasury debt.
According to US Treasury officials, the 10-year US Treasury bond yield is expected to remain elevated due to sustained inflation and strong demand for debt, which could potentially increase stock market volatility. As a result, many investors are looking at mid- and short-term US bonds as a means of cash management while they wait for more attractive investment opportunities.
However, with the end of the interest rate hike cycle, some investors may opt for long-term US Treasury bonds to lock in a return of 4% or higher and exit at a favorable time.
What is your take on this situation? Are you considering investing in long-term or short-term US Treasury bonds? Why?
Related Funds
Investing in US Treasury bonds isn't the only way to gain exposure to this market. There are funds available that hold these securities. These funds can help provide investors with access to the potential returns of US Treasury bonds while maintaining a balanced portfolio across multiple asset classes.
Here are the top 5 bond funds in Moomoo Fund Hub with a higher percentage of US Treasury bonds in their portfolios. Let's take a look at them!
*The above fund selection is based on the data disclosed in the fact sheets of fund companies.
*The selected currency for the funds in this event is USD. Only one currency/dividend type will be displayed for the same fund.
Do you have any specific funds in mind?![]()
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1. What is your outlook for US Treasury bonds? Are you more optimistic about short-term or long-term bonds, and why?
2. Will you be adding US Treasury bonds or related funds to your portfolio in the near future? If so, which specific products do you prefer? Why?
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Nurse 805 : TMF
mr_cashcow : Currently I have not invested in any US Bonds but am interested in short term US bonds, maybe I just need a little push with bond promos
Maybe moomoo team can do a more in-depth analysis on the various bonds to help users better understand and make more informed decisions
My main concerns are mainly the many negative returns even for the top 5 US bond funds, liquidity is also a top concern that I have as 10 years is a really long time
Definitely need to do a lot more research and due deligience before I can pull the trigger, shall KIV and see what others have to say
Edit: Having read the other user's comments, it seems like US bonds might be a good option to diversify my portfolio since it is back by the US government so the risk is relatively low
帅气逼人的范恩 : My opinion on long-term treasury bonds is quite optimistic; after all, the 5% interest rate is unlikely to last long. Moreover, America's debt is too huge, and the Fed cannot afford the high interest rate caused by long-term high interest rates.
CY Loke : As 10-year Treasury yields topped 4.2%, a major ETF that tracks returns on US Treasury bonds fell 9% over the past month. It is worth noting that the recent increase in yields has been mainly concentrated in the US, but there is no obvious reason.
The report said that most of the changes in US Treasury yields were due to rising real interest rates and had little to do with inflation. As inflation continues to decline, concerns about recession have abated, and the probability of a soft economic landing has increased. Although interest rates in Japan have recently risen due to fine-tuning its ultra-loose monetary policy, this is not the reason for the change in US interest rates. US yields seem to be leading Japan's yield changes.
The report also said that, driven by the generative AI investment boom, technology stocks have surged across the board since the beginning of the year, especially the “Big Seven” US stocks, which may also drive capital outflows from US Treasury bonds. The end of the debt ceiling crisis enabled the US Treasury to issue about $1 trillion in new bonds in the third quarter alone. This will increase America's fiscal burden and is the core reason for the downgrade of the US government's debt rating. If the US economy remains stable and is still a long way from the inflation target, US monetary policy may remain tight for a long period of time. Even if the Fed stops raising interest rates, it may introduce more quantitative austerity policies
Dadacai : I am standing on the sidelines for now. Bond prices and interest rates have an inverse relationship. When interest rates go up, bond prices come down. The recent downgrading of the US government’s credit rating is another risk. Short term bonds will be more attractive than long term bonds when interest rates are rising. Although interest rate hikes will stop eventually, exactly when that will happen is still a bit of a question mark. @hanabi3@phady05@93339888@aoimizu@小虎发大财
Biggy168 : My understanding is stk goes down, bond go up, but for next quarter i believe the bull will come as it had been correcting for quite sometime, come on BULL,...
phongy45 : 10 years long time
phady05 Dadacai: I'm saving money for the next opportunity
圓寶 : 1. Treasury bonds (T-bonds) are fixed-rate U.S. government debt securities with a maturity of 10 or 20 years.
2. T-bonds pay semiannual interest payments until maturity, at which point the face value of the bond is paid to the owner.
3. Along with Treasury bills, Treasury notes, and Treasury Inflation-Protected Securities (TIPS), Treasury bonds are one of four virtually risk-free government-issued securities backed by the U.S. government's ability to tax its citizens.
Judging based on the above 3pts, it does seem like an attractive product to invest in but Treasury bonds are susceptible to inflation risk and interest-rate risk, which could reduce the returns.
It is a low-risk assets with safe but low returns. A good option for those seeking refuge from volatile equity markets.
Mars Mooo : Rising yields: Time to invest in funds that hold US treasury bonds and at what maturity?
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