Bond Investors Shift Toward 5-to-10-Year Treasuries as 10-Year Yields Hit 5%
Updated
Updated · CNBC · Sep 15
Bond Investors Shift Toward 5-to-10-Year Treasuries as 10-Year Yields Hit 5%
3 articles · Updated · CNBC · Sep 15
Summary
10-year Treasury yields topped 5% on Tuesday—the highest since 2007—prompting investors to revisit medium-term bonds after favoring ultrashort maturities to avoid rate-driven price swings.
At current yield levels, strategists say the 5-to-10-year part of the curve offers a better risk-reward tradeoff because higher coupon income provides more cushion against further price declines if rates keep rising.
Several investors and advisers now favor seven- to 10-year bonds or laddered five- to 10-year Treasuries, while still steering the most rate-sensitive buyers toward shorter-duration portfolios.
The appeal comes even as markets expect the Federal Reserve to raise rates by another quarter point on Wednesday and CNBC's Fed survey points to at least two hikes this year.
Stocks still retain an edge for growth investors, but a 5% risk-free 10-year yield—$50,000 a year on a $1 million holding—is making bonds newly competitive for income-focused portfolios.