10-year Treasury yield hit a 19-year high—and some investors see opportunity to buy bonds — SkimNews
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- 10-year Treasury yield reached 5.208% on Thursday, the highest level since June 2007, fueled by elevated inflation, higher oil prices, and expectations of further Federal Reserve rate hikes; yields remained elevated on Friday.
- Higher long-term yields translate directly into rising borrowing costs for mortgages, auto loans, and consumer financing, according to Morningstar Wealth chief multi-asset strategist Dominic J. Pappalardo.
- BlackRock's Steve Laipply called the environment a "generational income opportunity," noting investors can lock in higher rates on longer-term bonds before yields potentially move further.
- Real yields on Treasury notes have risen on net since February, around the time the war with Iran began and oil prices jumped, amplifying income potential for bond buyers.
- Existing Treasury prices fall when yields rise because their lower fixed payments become less attractive compared with newly issued notes paying higher rates.
- Pappalardo suggested investors consider bumping bond allocations from 10% to 15-20% depending on time horizon, but cautioned against overhauling portfolios based on short-term market moves.
- Laipply warned yields could rise further if the Fed hikes more than priced in or oil prices climb higher, but could fall if the Iran conflict de-escalates — advising investors not to try timing the bond market.
Why it matters: Investors with capital to deploy can now lock in 5.208% on a 10-year U.S. government bond — the highest yield since June 2007 — while the same benchmark is pushing mortgage and auto loan rates higher. Laipply framed it as a 'generational income opportunity,' but cautioned that yields could keep climbing if the Fed tightens more than expected or oil prices spike further.
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