Tag Archives: 10 Year

Quick Update on Treasury Yields…. 2 Year and 10 Year Treasury Yield Down, Price Up, Good for Stocks at the Moment but ….

Posted on November 8, 2023 by | Leave a comment

With a road trip happening as you read this…. was a bit short on time for our mid-week post…. links in this post explain a lot….

Wanted to draw your attention to the move in US Treasury yields/bonds (and show off our new Koyfin technology too) …. this is the 2 and 10 year (still inverted- more to come on this- digressing) ….more importantly, the sudden drop, commenced by an FOMC meeting and then reinforced by weaker Employment data has bond interest rates down, bond prices up…..

This move down in yields has initially pushed Stocks up, and bond portfolios UP… we are cautious to call a victory lap on this bond and interest rate movement, but again worth noting…..

More importantly, bonds go up and rates down, under this circumstance because the smart guys in the room… are pricing in a slowing of the economy…. NOT usually good for Stocks…. after the candy wears off!

Have a Great “Quick Deeper Dive/Second Level Thinking on Rates” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

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Posted in Interest Rates, Investing/Financial Planning, Market Comments

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The Fed Raised Rates, Analysis on Short and Long Term Rates, Interesting Observations From Conference Conversations

Posted on November 7, 2022 by | Leave a comment

Last week during the afore mentioned conference, the FOMC (Federal Open Market Committee) continued their increases in the the short end of the yield curve aka Fed Funds Rate…

FOMC – Federal Reserve Raises by .75%

Last week the FOMC continued their increases in the very short term Fed Funds Rate…

Note the 1 Year Treasury compared to the 10 Year – Inverted as the longer term fixed income market could be looking forward to the eventual slow down.

In a chance conversation at the conference, Liz Ann Sonders – (Chief Investment Strategist of Charles Schwab) and I had a conversation about the FOMC meeting and an interesting observation.

The press release had some soft language that led many to believe they may be on the path to slowing increases…. Capital Markets took off…. of course Powell could see this and during his live press conference made sure to re-iterate the increases were still on the table…

Sonders and I both agreed, had the capital markets not gotten ahead of themselves… Powell would likely have said nothing… The Fed wants the slow down …

Have A Great “Fed Raised and Analysis” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

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Posted in Economy, FOMC, General Financial Planning, Interest Rates, Investing/Financial Planning, Market Comments, Retirement Planning

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The Smartest Guys in the Room, The Bond Markets and Participants – Part 2 of FOMC Dot Plot Update

Posted on June 23, 2021 by | Leave a comment

Part 2 of our overzealous post started Monday that was a bit too long- Enjoy!

There’s an old saying that the smartest guys in the room are the Bond Market or Bond Market Participants.

Bond market participants have way less to think about than their brotherin equity market participants, Basically bond participants only think of the economy, the credit worthiness and length of their investment.

Using the USA as your proxy and with the United States being the most credit worthy bond in the world, there is one less thing bond market participants have to worry about. Taking a peek at the 10-year US treasury yield which would reflect mostly economic expectation or possibly the future growth, of course there could be outside investors rushing to the US treasury market in search of higher yields boring the matter a bit, but all other things set aside under the surface post speech bond market investors are expecting greater controlled economic growth, sooner (2 year Movement.)

Dramatic Movement in the 2 Year Treasury

In order to get a most up to date chart, we needed to use futures contracts, so bear with us, as the chart goes down the yield is rising… bond guys are pricing higher rates now!

Here is a close up of the latest few days, again on the 2 Year

Not surprisingly a bit of a come back (higher prices lower yield) in the chart after such a large move.

30 Year Movement

Same use of futures contract here…

Higher chart price is lower yield? The initial drop is in the February March 2021 time frame as the Economy began to open, but take note of the move UP – lower yields in the last few weeks!

This may seem counter intuitive, but the eventual increase in rates would thwart inflation and is being expressed by lower long term rates…

We’ve talked at length on inflation versus deflation, so will leave it alone at this time but it might be noted that’s the smartest guys in the room thank future economic growth is at least higher and longer term inflation is not their concern, at least for now!

Have a Great “FOMC – Smartest Guys In the Room Review” Day!

John A Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

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Posted in Economy, FOMC, Interest Rates, Investing/Financial Planning, Market Comments, Political, Retirement Planning

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All Eyes on Interest Rates … Rate Run

Posted on February 24, 2021 by | Leave a comment

We have been watching interest rates closely as well as a local born inflation gauge called the Trimmed Mean put out by our Own Dallas Federal Reserve….

Interest rate movement can be a predictor of better times ahead… Think reopening and also of future inflationary waves…

Here is a shorter termed graph of the 10 Year Treasury Yield….

Purposely a shorter term graph to exaggerate the recent movement…

Next up, we fly much higher to the ten thousand foot level to show you while rates are moving, they are far from sky high….

Higher rates can be a headwind to markets… fast moving higher rates would have a high probability of disruption…

Watching Rates and Inflation

Slower, gradual, less jittery rates may be just what the Dr. ordered… not too hot, not too cold…

We will be watching!

Have a Great “Watching Rates” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

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Posted in Debt - Debt Management, Interest Rates, Investing/Financial Planning

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Interest Rates and Their Importance, Part 1

Posted on April 25, 2018 by | Leave a comment

Yesterday the 10 year US Treasury Bond did something it has not done in some time …. reach a yield of 3%.

4-24-18 10 year Treasury Yield

The Yield Curve – Interest Rates

We have been preparing for some time a multipart series about interest rates and the yield curve its self, and with the recent move in rates higher (finally) the timing could not be better. You will see a lot about this in the coming weeks if you peer into the Financial Section on your computer, periodical or tablet view … so we wanted to prep in advance.

This discussion will be multipart analysis, discussion, education and conclusion …. we hope you enjoy (we think you will as there is a terrific conclusion).

While the chart above shows the most popular “Headline” rate for most, it is really just one part of a series of rates …. here is where our discussion is born… so let’s go!

20180424_122733630_iOS

Liking to keep things simple, this is a self drawn chart that we will build upon, but gets the point across.

The longer something takes, generally the more it should cost.  (Greater risk of loss)

Said another way, the more time something takes, the more it should cost.

If you loan a buddy $100 bucks today to be repaid tomorrow, it is less risky than if you give it to him for a year and hope to get it back! Right?

Our self made chart shows just this, the longer the time, the greater the cost.

Looking again at our chart, we could say the term is anywhere from one day going all the way out to 30 years, with the afore mentioned 10 year term being near the right end of the chart.

This chart shows what could be called a normal yield curve or cost situation.

Next up … Change!

Have a Great “Yield Curve Discussion” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

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Posted in General Financial Planning, Interest Rates, Investing/Financial Planning, Market Comments

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Taking a Peek at Interest Rates – 10 Year Treasury – Short and Long Term Look

Posted on January 24, 2018 by | Leave a comment

Low rates are great. However we have argued multiple times, low rates too long can cause more damage than good.

Higher rates … increasing moderately, NOT super fast is the perfect scenario.

10 Year Rate Peek

Over the short term, the much watched 10 Year Treasury Rate looks like it is on a tear… maybe even moving too fast …

1-22-18 10 year - 1 year graph

While we peek at the short term, turning points are more important over the LONG term ..

Here is a longer term chart …

1-23-18 10 Year Long term

The white line on this chart is what is called a trend line. Many call this stuff VooDoo … Let’s liken this to momentum in a sporting event… hard to define, but certainly existent.

Keep an eye on the far right corner of this chart … if it continues, then we may be headed for a sustainable period of longer term rates … Good if it occurs slowly.

Have a Great “Higher Rates” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

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Posted in Interest Rates, Investing/Financial Planning, Market Comments

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Nice Economic Report Adds to Our Theme … Raise those rates Janet!

Posted on February 9, 2015 by | 1 comment

The regular monthly smorgasbord employment report released last Friday (2-5-15), continued our theme (higher rates), with even more positives than we had expected.

Digging Deeper than just the Headlines

While the USA generated 257k (first estimate, will be revised) new jobs for the month of January, the action was elsewhere.

  • Average hourly earnings were up .5%, this is a huge number and very good for the employment situation as employees may FINALLY be getting a raise!
  • Unemployment rate went UP (increasing labor participation rate), but that is because more people entered the workforce, again VERY good for the economy!

Higher Rates – 10 Year Yield Rises

10 Year 2-6-15

While all of this is good news for the economy, these are headwinds for the capital markets, in the SHORT term (1-2 years)  …. longer term this is very good news, as it helps support the frothy valuations and gives us more confidence that the Fed will be able to raise rates this year … FINALLY!

Janet Yellen and the other Federal Open Market Committee (FOMC) members … Raise those rates !

Have a Great Day!

John A. Kvale CFA, CFP

http://www.jkfinancialnc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225

 

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Posted in Economy, Market Comments

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October 2014 Financial Planning Tip, Capital Market and Economic Review (Video)

Posted on November 5, 2014 by | 1 comment

Welcome to our monthly Economic, Capital Market, and Financial Planning tip of the month. Once again a special thanks to all of  YOU … the best clients and friends as your experiences have again given us the subject matter for our Financial Planning Tip of the Month.

For those new to our writings, we touch on the most pertinent Economic and Financial “stuff” along with a video of my mug that has even more specialized details of the latest month as well as this post.

VIDEO

You Tube Direct Link   or   Vimeo Direct Link

 

Financial Planning Tip: Home Stretch 401k/Qualified plan Max time401k

With just a few more contribution periods left, now is a good time to review your 401k contributions to make sure you are contributing the maximum available for your situation.

Also, take a peek to see if your allocations are correct as well. If we have completed your withholdings and allocations, and something has changed, shoot a quick note to us, we will review again to make sure we are all on the correct path to the end of the year.

It’s all about those rates (no treble)

Less bond dealers and a blow up somewhere led to a sharp fall in rates. It will eventually come out who was forced to sell, but as a October boo goes, rates cratered lower mid month with a slight bounce back.

This appears to us more of a situation (someone was forced to sell) than fundamentals and we continue to see higher rates in the nearer future.

10 Year 10-31-14

 

Quantitative Easing Ends

Several years ago, the Federal Open Market Committee then chaired by Ben Bernanke embarked on a path of asset purchases cleverly name Quantitative Easing (QE).Bernanke Helicopter Merk- 2012-06-05-bernanke-cartoon-qe3

  1. Three continuous rounds of QE (1,2,3)  were completed through monthly purchases of fixed income/bonds via the Federal Reserve
  2. Longer term Interest rates were pushed down
  3. Asset prices were pushed up
  4. The Economy, while slowly, caught its footing

Just as they should, these asset purchases were stopped in the month of October.  Markets should begin more open price discovery (we think higher rates.)

Have a Great Fall!

John A. Kvale CFA, CFP

http://www.jkfinancialinc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225

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Posted in General Financial Planning, Interest Rates, Investing/Financial Planning, Video, World Political

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10 Year Treasury Rate ALERT … Not Alarm

Posted on May 21, 2014 by | Leave a comment

We have mentioned interest rates probably more than you would like, but rates are so critical at this moment in time.

10 Year Treasury Yield Alert

10 Year Treasury 5-16-14

The rate of the US 10 year treasury has fallen decidedly below our voodoo trend line.

Here are a few possibilities in order of fear with our possible probabilities .

  1. We are going into a recession (Very Scary but only a 10% chance from our perch)
  2. There is a shortage of supply due to the Fed’s QE purchases (20%)
  3. Mario Draghi’s latest comments on EU QE purchases are chasing investors here (10%)
  4. Pension/Institutional/Big investors are shifting to fixed income (10%)
  5. Russia Ukraine fears are pushing our rates down (10%)
  6. Something we do not know yet (40%)

We want to alert you to this, but not alarm. We are on VERY careful watch.

Have a Great Day!

John Kvale CFA, CFP

http://www.jkfinancialinc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225

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Posted in Interest Rates, Investing/Financial Planning, Market Comments

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Interest Rate Forecast…Easy and Hard Calculation

Posted on August 26, 2013 by | Leave a comment

Interest rates are in total control lately as we have been mentioning frequently. Uncle Ben (Bernanke) looks set to begin taking the punch bowl away on September 22, 2013 their next scheduled meeting by backing down on the $85 billion monthly purchases.

So Where will Rates go? (stop)

Of course, no one knows where rates will stop, but a move from the lows of 1.60% to almost 3% is an enormous move on a percentage basis and we are happily surprised how other asset classes have held up. How much farther can they go?

Let’s start by using a hard/technical or text-book calculation. Generally rates should be the sum of economic growth (GDP) and Inflation (CPI). Using a smoothed trailing estimate of each of these, we feel comfortable with a 2%+2% or 4% total, under current economic conditions.

For our easy calculation, let’s use a graph of the 10 year with the S&P 500 together, which is one of my personal favorites.

!0 Year V SPY 8-23-13

With rates currently at 2.81%, if your eye gravitates to the same area as most, 4% looks like our target!

So there you have it, 4% the technical way or the easy way from our perch.  We are fine with this, but let’s just GO SLOW (12 months at least), if we move quickly to our target, there will be trouble!

Have a Great Monday!

John Kvale

http://www.jkfinancialinc.com
http://www.street-centa.com
8222 Douglas Ave # 590
Dallas, TX 75225 

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Posted in Interest Rates, Investing/Financial Planning

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