Is 5 for a dime a bargain?
U.S. 10-year Treasury reaches 5%
October 20, 2023
Is 5 for a dime a bargain? The world is wondering as the U.S. 10-year Treasury reaches 5%.
Running Point and I were asked similar by Davide Barbuscia at Reuters for their article, “U.S. 10-year Treasury yields hits 5% for first time since 2007,” regarding how bond markets and investors will react to the breach of that threshold number. In Halloween terms, is it a trick or a treat? 👻🎃📈
MICHAEL SCHULMAN, PARTNER & CIO, RUNNING POINT CAPITAL ADVISORS, EL SEGUNDO, CALIFORNIA
“I see the 5% as a psychological threshold but I’ve been telling my clients for over a year that we are in a higher for longer environment, that inflation is going to stay around, higher than it has in the past, and with it interest rates also.”
“Some people will look at this number and fear that things might get worse .. simultaneously other people look at these high rates and think that historically this is time to invest.”
At a minimum, crossing the 5% yield threshold on the 10-year Treasury will trigger numerous investment committees to evaluate strategies and tactics and redo their scenario analysis with new higher rates.
Equity managers may also want to lean on their charts, programs, and analysis because many charts show that 5% or higher on the 10-year has not been healthy for stocks.
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-23-104
