TREASURY NOTES: Panic Attack Mode?

Posted on April 10, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Treasury notes are typically considered one of the world’s safest safe-haven assets—the US has always repaid bondholders on their investment, plus yield (interest). That’s why you can usually count on the bond market to rally when the stock market craters. And, vice-versa. But not this time:

  • The benchmark 10-year bond yield, which moves inversely to bond prices, had its steepest spike this week since the 2008 financial crisis. The 10-year yield is more closely watched than the 30-year yield (which also spiked) in part because it influences home and auto loan rates.
  • A Treasury auction of 3-year bonds on Tuesday was met with the softest demand since December 2023. That helped drive the bond sell-off on fears of a pullback among international investors, who hold $8.5 trillion in US Treasuries (Japan and China lead the pack).

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EXPECTED: Breakeven Inflation Rate

Posted on December 16, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Measure of Expected Inflation

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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The breakeven inflation rate is the difference between the nominal yield (usually the market yield, which includes an inflation premium) on a fixed-income investment and the real yield (with no inflation premium) on an inflation-linked investment of similar maturity and credit quality.

So, if inflation averages more than the breakeven rate, the inflation-linked investment will outperform the investment with the nominal yield.

Conversely, if inflation averages below the breakeven rate, the investment with the nominal yield will outperform the inflation-linked investment.

Breakeven inflation rates are also considered useful measures of inflation expectations—higher breakeven rates represent higher inflation expectations (and higher relative prices for inflation-linked investments), while lower breakeven rates represent lower inflation expectations (and lower relative prices for inflation-linked investments).

Therefore, ideally, investors want to purchase inflation-linked investments when breakeven rates are relatively low because that’s typically when prices are also relatively low.

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The Ten Year Treasury Note

Posted on December 17, 2021 by Dr. David Edward Marcinko MBA MEd CMP™

WHAT IT IS – HOW IT WORKS – WHY?

By Staff Reporters

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10-Year Note

What it is: The 10-year Treasury note is a debt instrument the U.S. government issues to fund itself. The Federal Reserve closely watches the “yield” (i.e. the return on investment) as a benchmark for other interest rates.

How it works: The U.S. Treasury issues bonds that are auctioned to investment banks by the Federal Reserve; banks can then sell those bonds to investors. The 10-year matures over—you guessed it—10 years, with interest paid out every six months until the full value is paid out at the end.

Why it matters: The 10-year is considered another safe-haven asset for investors. But as demand goes up, the yield goes down. Investors can even end up paying more than the face value of the Treasury note (but some are willing to accept the tradeoff for the low-risk investment).

CITE: https://www.r2library.com/Resource/Title/082610254

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