Bond Yields Begin to Rise….Again

Stocks suffered through a tough week, and it might have the bond market to blame. Through the first month of the year, bond yields declined while equities staged a comeback from last year’s woes. This week saw a reversal of that trend. The 10-year Treasury is near levels where it started the year while shorter-term maturities like the three-month and two-year Treasury are higher than where they began the year.

10-Year Treasury Yield graph

The rise in yields this past week reflect the view that the Fed may raise rates higher and keep it at these levels longer than anticipated. We believe the yield on the 10-year Treasury will end the year lower than where it began and hence find the current rates attractive. We also find the high yield on short term rates appealing. Equities may struggle to attract investment dollars with the yields found in the fixed income markets. Additionally, investors that may be holding lower yielding deposit and savings accounts should consider looking at ways to increase yields without taking on much incremental risk.

Source: The Wall Street Journal

The opinions expressed are those of Harrison Financial Services as of February 23, 2023 and are subject to change. There is no guarantee that any forecasts made will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment or security. Please remember that all investments carry some level of risk, including the potential loss of principal invested. Indexes and/or benchmarks are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance and are not indicative of any specific investment. Diversification and strategic asset allocation do not assure profit or protect against loss.