$VGIT and 10-yr yield relationship
The
VGIT
ETF movement seems to be inversely proportional to the 10-yr US bond yield
Typically as the yield increases, the bond price would also decrease.
Even though VGIT has an attractive yield (up to 6% p.a.) with monthly dividends, this requires at least 1-year holding period.
Moreover, there are expectations of a Fed rate cut in 2024. While this may push the price higher, the estimated upside seems to be only +8% of my entry price (around the end-2019 levels).
On the other hand, looking at the red trend lines, prices may trade sideways within the triangle for a few months thus limiting capital upsides and I will be stuck to collecting monthly dividends. It's a decent return just that I already have a different investment account with similar risk appetite and similar yield.
So with the improving equity market condition, perhaps it's time to move from VGIT to the equity market with better capital upside?
From Reuters: This recovery will hold, according to median forecasts from a Dec. 7-12 Reuters poll of 50 bond strategists, mostly from sell-side firms, who said yields will only reach 4.25% by end-February though will likely stay volatile in the interim.
The 10-year yield will then fall to 4.10% by end-May, before hitting 3.88% in 12 months, lower than the 4.30% and 4.00%, respectively, expected in a November poll but considerably higher than surveys conducted earlier this year.
VGIT
ETF movement seems to be inversely proportional to the 10-yr US bond yield Typically as the yield increases, the bond price would also decrease.
Even though VGIT has an attractive yield (up to 6% p.a.) with monthly dividends, this requires at least 1-year holding period.
Moreover, there are expectations of a Fed rate cut in 2024. While this may push the price higher, the estimated upside seems to be only +8% of my entry price (around the end-2019 levels).
On the other hand, looking at the red trend lines, prices may trade sideways within the triangle for a few months thus limiting capital upsides and I will be stuck to collecting monthly dividends. It's a decent return just that I already have a different investment account with similar risk appetite and similar yield.
So with the improving equity market condition, perhaps it's time to move from VGIT to the equity market with better capital upside?
From Reuters: This recovery will hold, according to median forecasts from a Dec. 7-12 Reuters poll of 50 bond strategists, mostly from sell-side firms, who said yields will only reach 4.25% by end-February though will likely stay volatile in the interim.
The 10-year yield will then fall to 4.10% by end-May, before hitting 3.88% in 12 months, lower than the 4.30% and 4.00%, respectively, expected in a November poll but considerably higher than surveys conducted earlier this year.