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MATT VARNER'S FIXED INCOME REVIEW
June 12, 2013
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|
1yr |
2yr |
3yr |
5yr |
10yr |
20yr |
30yr |
| U.S. Treasury yields as of 6/11/2013 |
.14 |
.34 |
.57 |
1.12 |
2.20 |
3.00 |
3.33 |
| U.S. Treasury yields as of 12/31/12 |
.16 |
.25 |
.39 |
.72 |
1.78 |
2.54 |
2.95 |
| Change in Treasury yields from 12/31/12 |
-.02 |
+.09 |
+.18 |
+.40 |
+.52 |
+.46 |
+.38 |
| |
|
| Municipal yields as of 6/11/2013 |
.19 |
.34 |
.55 |
1.10 |
2.32 |
3.41 |
3.47 |
| Municipal yields as of 12/31/12 |
.21 |
.37 |
.55 |
.90 |
1.99 |
3.03 |
3.16 |
| Change in Municipal yields from 12/31/12 |
-.02 |
-.03 |
+.00 |
+.20 |
+.33 |
+.38 |
+.31 |
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Source: US Treasury and Bloomberg |
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Yesterday, the 10 year U.S. Treasury note rose to levels that we have not seen since April 2012 before closing at 2.20% as reported by the U.S. Treasury website. Interest rates have been rising recently as the market tries to anticipate the tapering of the Federal Reserve’s $85 billion a month bond buying stimulus. The Federal Reserve will most likely keep the bond buying program at its current level longer than the market anticipates ensuring the economy is strong. Once the Federal Reserve starts scaling back its bond purchases it will have the option to adjust the size of the purchases based on the strength of the economy. Therefore, it seems we might be in for some volatility in rates as market participants attempt to forecast the strength of the economy along with the level of Federal Reserve stimulus. The next Federal Open Market Committee (FOMC) meeting is next week June 18 th and 19 th.
On Monday, Standard & Poor’s (S&P) upgraded the outlook on U.S. credit from negative to stable. S&P downgraded the U.S. credit rating in August 2011 from AAA to AA+ with a negative outlook. Credit ratings providers use outlook to provide their opinion of the direction of the credit rating within the next 6 to 24 months. The rating change had little to no noticeable effect on the market. Fitch and Moody’s have AAA with a negative outlook and Aaa with a negative outlook ratings respectively, on U.S. credit.
Leonetti & Associates, LLC views or opinions are as of a certain date and subject to change without notice. The material contained herein is for informational purposes only and obtained from sources we consider reliable. We make no guarantee as to its accuracy or completeness. References to specific securities and industries/sectors should not be considered recommendations to buy or sell any security or advisory service. Past performance is not a guarantee of future results.
Index
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