Treasuries are an intersting play right now. Depending on your home currencies it still might be a good moment to consider stocking up on them in your portfolio.
Couple of notes looking at the chart.
FOMC participants’ assessments of appropriate monetary policy: Midpoint of target range or target level for the federal funds rate was shown to be around 4% (per June 15 '22 Summary of Economic Projections).
The bond market had been signaling the need for FED fund rate hikes for some month already.
Looking at it from a EUR buying perspective you can currently get 30Y treasuries at around 3.3% (2.75 - 3% nominal plus slightly stronger EUR at the time of writing yield with an ~5% lower price still.
Forecasting a continued weak EUR and a top of the fund rate at around 4% these treasuries ought to be bound to rise latest in 2024.
Newly issued bonds ought to be reaching 4% soon. If so those will be attractive too.
It should be noted that there is no guarantee that the FED (nor the ECB) will be able to contain inflation or the starting recession.
The EU is likely to be hit harder for both.
That said the FEB may continue and we may end of up with much higher FED fund rate of above 4% (5%, 6%, .....).
This scenario seems unlikely as such high interest rates would break the financial markets and econimies.
It is to be noted that the FED's fund rate it approaching to be break a downward trend since 1984. On the chart the trend from 1988 has already been broken.
This chart does give some indications of the dependencies of these three key figures. But one can easily spot that it is not a clear when X goes up then Y does too.
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Couple of notes looking at the chart.
FOMC participants’ assessments of appropriate monetary policy: Midpoint of target range or target level for the federal funds rate was shown to be around 4% (per June 15 '22 Summary of Economic Projections).
The bond market had been signaling the need for FED fund rate hikes for some month already.
Looking at it from a EUR buying perspective you can currently get 30Y treasuries at around 3.3% (2.75 - 3% nominal plus slightly stronger EUR at the time of writing yield with an ~5% lower price still.
Forecasting a continued weak EUR and a top of the fund rate at around 4% these treasuries ought to be bound to rise latest in 2024.
Newly issued bonds ought to be reaching 4% soon. If so those will be attractive too.
It should be noted that there is no guarantee that the FED (nor the ECB) will be able to contain inflation or the starting recession.
The EU is likely to be hit harder for both.
That said the FEB may continue and we may end of up with much higher FED fund rate of above 4% (5%, 6%, .....).
This scenario seems unlikely as such high interest rates would break the financial markets and econimies.
It is to be noted that the FED's fund rate it approaching to be break a downward trend since 1984. On the chart the trend from 1988 has already been broken.
This chart does give some indications of the dependencies of these three key figures. But one can easily spot that it is not a clear when X goes up then Y does too.
--------------------------------------------------------------------------------------------------------
** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. **
--------------------------------------------------------------------------------------------------------
!! Donations via TradingView coins also help me a great deal at posting more free trading content and signals here !!
