How Long Can Bond Yields Stay Low?

Despite numerous predictions that bond yields would soar (and therefore bond prices would fall), yields have actually fallen so far in 2014. After rising from record lows last year, the yield on 10-year US treasury bonds is currently around 2.5%, still far below its typical historical range. How long can bond yields stay so low? The answer is “possibly a very long time” based on the experiences of other countries.

Topics: Treasuries Japan Blog Bonds Yield

Are Treasury Bonds “Risk-Free”?

The term “risk-free” is often used to describe treasury bonds issued by the US government. Yet in recent years Congress has repeatedly hesitated to raise the legal limit on the amount that the federal government is allowed to borrow, sparking panicked legislative deal-making to keep the government from defaulting on some of its debt. After one of these episodes, in 2011, Standard & Poor’s even lowered its credit rating for the US government. After this political buffoonery, should you still consider treasury bonds to be riskless? The answer is that from an investors’ perspective, treasury bonds were never risk-free.

Topics: Treasuries Blog Risk Bonds Debt Ceiling