Higher Longer-Term U.S. Bond Yields Offer Asymmetric Risk
Dow Jones
Yesterday
0526 GMT - Rising longer-term bond yields are increasing competition for capital, says Ipek Ozkardeskaya, senior analyst at Swissquote. At current levels some investors like the idea of moving into a safer play and buying U.S. Treasurys, she says. At a starting yield of around 5.3%, the potential one-year returns look asymmetric. Coupon income could cushion losses until the yield rises to roughly 6.1%, she adds. A rise of 100 basis points would imply a total loss of around 1.5%, while a 100 basis point fall could generate a return of nearly 13%, including coupon income, she says.
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