Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
Blog Home
Bob Carey
Chief Market Strategist
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 are from prior posts.  
  2. The Federal Reserve ("Fed") has kept the federal funds target rate (upper bound) at 25 basis points (bps) since March 2020 (just after onset of COVID-19). 
  3. For the 30-year period ended 2/25/22, the federal funds target rate (upper bound) averaged 2.50%, according to Bloomberg. It reached as high as 6.50% in May 2000. 
  4. The yield on the benchmark 10-year Treasury note (T-note) rose from 1.12% at the close on 1/8/21 to 1.96% at the close on 2/25/22, or an increase of 84 basis points, according to Bloomberg. Its average yield was 4.00% for the 30-year period ended 2/25/22. 
  5. For comparative purposes, here were the closing yields as of 2/25/22 for the indices featured in the chart: 4.25% (U.S. Leveraged Loan 100); 5.80% (U.S. High Yield Constrained); 3.63% (22+ Yr. Municipal Securities); 4.86% (Fixed Rate Preferred Securities); 1.96% (7-10 Yr. U.S. Treasury); 2.61%% (Freddie Mac Mortgage); 3.25% (U.S. Corporate ); and 2.72% (Global Corporate), according to Bloomberg.
  6. As indicated in the chart, the price declines in the 7-10 Year U.S. Treasury Index and the U.S. Corporate Index were clearly the most dramatic between 1/8/21 and 2/25/22. 
  7. The trailing 12-month Consumer Price Index (CPI) rate stood at 7.5% in January 2022, according to the Bureau of Labor Statistics. That is up significantly from its 1.4% level in January 2021 and its 2.3% average rate over the past 30 years.
  8. In addition to the multiple rate hikes expected from the Fed this year as well as the potential for inflation to trend higher, bond investors will also need to monitor the war between Russia and Ukraine to see what impact it may have on energy prices and the global economy. Stay tuned!    

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, March 1, 2022 @ 11:09 AM • 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 Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email

A Snapshot Of The Last Four 10%-Plus Declines In The S&P 500 Index
A Snapshot Of Gold, Silver And The Miners
Top-Performing S&P 500 Index Subsectors YTD (Thru 2/15)
Rising Bond Yields And Stock Performance
This Covered Call Index Tends To Outperform The S&P 500 When Returns Are Modest Or Down
S&P 500 Index Earnings & Revenue Growth Rate Projections
S&P 500 Index Dividend Payout Profile
A Global Snapshot Of Government Bond Yields
Sector Performance Via Market Cap. (2020-2021 and YTD-1/25/22)
How Bonds Have Fared Since 8/4/20
Skip Navigation Links.
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.