Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
Blog Home
Bob Carey
Chief Market Strategist
Click for Bio

Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube

  Treasury Bondholders Need To Get “Real”


View from the Observation Deck

  1. For the 20-year period ended 2012, the average real rate of return (yield less inflation) on the 10-Year T-Note was 2.13 percentage points (see chart). This figure does not take taxes into account.
  2. In reality, that 20-year period is much more of a tale of two halves. From 1993-2002, the average real rate of return was 3.17 percentage points. From 2003-2012, it was a meager 1.09 percentage points.
  3. The former is much closer to the historical norm.  The latter indicates that bondholders have not been earning much of a return after adjusting for inflation.
  4. The average real rate of return year-to-date was 0.53 percentage points (thru 8/13).
  5. A survey of economists by Bloomberg revealed the following average quarterly yield estimates for the 10-Year T-Note: 2.81% (Q4'13); 2.95% (Q1'14); 3.08% (Q2'14); 3.24% (Q3'14) and 3.33% (Q4'14). 
  6. The 10-Year T-Note closed today's trading at 2.51%. Its average yield over the past 20 years (10/22/93-10/22/13) was 4.75%.
  7. Shifting capital from risk assets to Treasuries in the midst of the financial crisis in 2008 and 2009 was a logical move for many investors, in our opinion. The question now is: What's the next move?

This chart is for illustrative purposes only and not indicative of any actual investment. There can be no assurance that any of the projections cited will occur.

To Download a PDF of this post, please click here.

Posted on Tuesday, October 22, 2013 @ 4:24 PM • Post Link Share: 
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
Weekly Video
Weekly Market Commentary
Weekly Market Watch
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email

Not so Fondly Remembering the Crash of '87
US Economy and Credit Markets Week Ended October 18, 2013
US Stocks Week Ended October 18, 2013
Variable Annuity Sales Boosted By Lower Rates And One Key Benefit
Agriculture Prices Potentially Poised For A Rebound
US Economy and Credit Markets Week Ended October 11, 2013
US Stocks Week Ended October 11, 2013
What’s Right With This Picture? Nearly Everything!
New Millennium Accompanied By Surge In U.S. Treasury Issuance & Weakness In U.S. Dollar
An October Focus on the Fundamentals
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 and the Internal Revenue Code. First Trust has no knowledge of and has not been provided any information regarding any investor. Financial advisors must determine whether particular investments are appropriate for their clients. First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks independently and is responsible for exercising independent judgment with respect to its retirement plan clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2018 All rights reserved.