Once again, bond yields on the 10 and 30 year U.S. Treasury Note are rising. Last week, the yields jumped sharply higher by more than 25 basis points on both the 10, and 30 year note.
Higher rates will affect the important mortgage market and this could be problematic to the recent inflation rally. As we all know, the Federal Reserve has been using its Operation Twist program to keep yields artificially low. The purpose of this is program is to keep the housing and refinance market stable. If mortgage rates start to increase further it could stall out the mini housing boom that has been occurring over the past few months. Traders can follow and trade the bond yields by using the iShares Barclays 20+ Yr Treasury Bond ETF (NYSEARCA:TLT), and the iShares Barclays 7-10 Year Treasury Bond Fund (NYSEARCA:IEF).
The leading home-builder stocks have been in bull mode since October 4, 2011. Stocks such as Toll Brothers Inc (NYSE:TOL), D.R. Horton, Inc (NYSE:DHI), and KB Home (NYSE:KBH) will often trade adversely to the higher bond yields. Yesterday morning, all of the major home-builder stocks were declining.
Leading utility companies are also negatively affected by higher bond yields. Often the leading utility companies will borrow money for operations and the higher bond yield will make those loans more expensive. Traders and investors can easily see how the Utilities SPDR ETF (NYSEARCA:XLU) sold off sharply last week when the yields spiked.
- English (UK)
- English (India)
- English (Canada)
- English (Australia)
- English (South Africa)
- English (Philippines)
- English (Nigeria)
- Deutsch
- Español (España)
- Español (México)
- Français
- Italiano
- Nederlands
- Português (Portugal)
- Polski
- Português (Brasil)
- Русский
- Türkçe
- العربية
- Ελληνικά
- Svenska
- Suomi
- עברית
- 日本語
- 한국어
- 简体中文
- 繁體中文
- Bahasa Indonesia
- Bahasa Melayu
- ไทย
- Tiếng Việt
- हिंदी
Yields On The Move
Latest comments
Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.