AlisterTalksBonds.com Sharon Alister logo

Search

stifel logo
 
AlisterTalksBonds.com Sharon Alister logo

Search

stifel logo
 

This Week’s Topic: Inverted Yield Curve

Inverted-Yield-Curve-8-10-1

SUMMARY:

Normally, short-term bonds yield less than long-term bonds (normal yield curve). But when the Fed raises the short-term rates (1 year or less), intermediate and long-term rates can fall below the rates you’ll find for short term offerings. This is an “inverted yield curve”: When short-term rates are higher than longer-term rates.

Don’t be tempted by short-term yields, however! When those short-term bonds mature, you may need to invest those funds somewhere else. By then, if the economy has slowed, intermediate and long-term bond rates may have already fallen a lot. What should you do?

Click for Inverted Yield Curve PDF

If your portfolio is greater than $500,000, Sharon Alister can provide a free analytic review to help ensure that your portfolio is in line with your investment goals. Call Sharon Alister at (800) 745-7110 or email info@AlisterTalksBonds.com

 

Interest Rates (Indications only)

Please note the rates for Ins’d and Pre-Res are not available from Bloomberg and will be updated as soon as possible.

Treasuries AAA Munis
3mo 1.815 N/A
6mo 2.009 N/A
1yr 2.237 1.74
2yr 2.482 1.87
5yr 2.809 2.19
10yr 2.970 2.53
30yr 3.145 3.14
today's rates chart

AAA Rated Munis

Pre-Res Ins’d Pure*
2 yr 1.91 2.05 1.87
5 yr 2.23 2.49 2.19
10 yr N/A 2.89 2.53
15 yr N/A 3.20 2.82
30 yr N/A 3.50 3.14

*Rated AAA on its own
Source: Bloomberg

This Week’s Topic: Inverted Yield Curve

Inverted-Yield-Curve-8-10-1

SUMMARY:

Normally, short-term bonds yield less than long-term bonds (normal yield curve). But when the Fed raises the short-term rates (1 year or less), intermediate and long-term rates can fall below the rates you’ll find for short term offerings. This is an “inverted yield curve”: When short-term rates are higher than longer-term rates.

Don’t be tempted by short-term yields, however! When those short-term bonds mature, you may need to invest those funds somewhere else. By then, if the economy has slowed, intermediate and long-term bond rates may have already fallen a lot. What should you do?

Click for Inverted Yield Curve PDF

If your portfolio is greater than $500,000, Sharon Alister can provide a free analytic review to help ensure that your portfolio is in line with your investment goals. Call Sharon Alister at (800) 745-7110 or email info@AlisterTalksBonds.com

 

Interest Rates (Indications only)

Please note the rates for Ins’d and Pre-Res are not available from Bloomberg and will be updated as soon as possible.

Treasuries AAA Munis
3mo 1.815 N/A
6mo 2.009 N/A
1yr 2.237 1.74
2yr 2.482 1.87
5yr 2.809 2.19
10yr 2.970 2.53
30yr 3.145 3.14
today's rates chart

AAA Rated Munis

Pre-Res Ins’d Pure*
2 yr 1.91 2.05 1.87
5 yr 2.23 2.49 2.19
10 yr N/A 2.89 2.53
15 yr N/A 3.20 2.82
30 yr N/A 3.50 3.14

*Rated AAA on its own
Source: Bloomberg

Investing involves risk, including possible loss of principal. When investing in bonds, it is important to note that as interest rates rise, bond prices will fall. Conversely, as interest rates fall, bond prices will rise.

Copyright © 2013 | Stifel, Nicolaus & Company, Incorporated. Member SIPC & NYSE, All Rights Reserved