The rate on the 20-year government bond heads for a high of almost 4.9%, becoming the first long-term Treasury yield to approach the 5% mark.
Nestled between the benchmark 10-year Treasury note and the 30-year bond is a security which rarely draws much mention: the 20-year, which was reintroduced by the U.S. government in May 2020.
Long-term Treasury yields are in the process of returning to historically normal-looking levels, as the higher-for-longer theme in rates continues to play out in the wake of the Federal Reserve’s policy decision last week. Such a development matters for at least one big reason: At an almost 5% yield, long-term government debt becomes an ever-more compelling option over equities for investors who aren’t yet in that part of the Treasury market, presuming they time their entry just right.
Historically speaking, a 3%-5% yield on the 10-year Treasury and its earlier counterparts is what’s generally prevailed based on data going all the way back to 1880, he said via phone on Tuesday. And it’s not unrealistic to think that the 20-year yield could be paving the way for the 10- and 30-year rates to also get closer to 5% “because the economy is more resilient than most people and the bond market expected.
Earlier on Tuesday, 10-, 20-, and 30-year Treasurys all swung between buyers and sellers, underscoring how much investors are caught between enticing yields and the possibility that the higher-for-longer theme might have more room to run. As of late-afternoon trading in New York, all three yields were slightly higher, with the 10-year BX:TMUBMUSD10Y hovering around 4.56% and the 30-year BX:TMUBMUSD30Y at 4.69%.
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