logo
  Join        Login             Stock Quote

Why I'm Watching These High-Yield Stocks Right Now

 March 26, 2012 10:10 AM
 


The S&P 500 is up 11% year-to-date. But there is another rally that is getting less attention: U.S. Treasury yields have been on the rise.

Short-term Treasury yields have inched up throughout 2012, while longer-term Treasuries have bumped up only in recent weeks.

Of course, interest rates are still well below where they were before the financial crisis. At the start of 2008, the 10-year Treasury yield was 3.9%, compared with 2.25% today.

Interest rates have been on a downward slide for nearly five years. The most significant descent started in 2008 when the Federal Reserve cut the federal funds rate to effectively zero. In fact, rates have been low for such a long time, borrowers have gotten a bit complacent.

There has been little urgency to borrow at low rates because, up until now, there has been no penalty for waiting. To some extent, a little bump in rates might do more good than harm to the economy. For example, the threat of even slightly higher mortgage rates might do a lot to get potential home buyers off the sidelines. Likewise, corporations might decide to borrow more now, locking in low rates before they rise.

Of course, the rise in rates may be a short-term phenomenon. Hedge-fund managers, however, are betting that it is the start of a bona fide trend. Believing yields might go even higher, hedge funds and other large investors sold 78% of their holdings of two-year Treasury futures the week ended March 13, according to a Bank of America/Merrill Lynch report. The same report noted that big money managers tripled their short positions against 10-year Treasuries.

I'll be keeping a close eye on this potential trend. But if rates continue to trend higher as they have in the past few weeks, a few companies will be winners...

Banks: Banks will still be able to borrow money at rock-bottom rates, but may be able to issue new home, consumer, and corporate loans at higher rates.


Next Page >>123
iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageChipotle Mexican Grill, Inc. (CMG) Q2 Earnings Preview: Will Higher Traffic Offset Higher Costs the Key

Chipotle Mexican Grill, Inc. (NYSE:CMG) will host a conference call to discuss second quarter 2014 read on...

article imageNetflix, Inc. (NFLX) Q2 Earnings Preview: The Ruby Month for a Reason

Netflix, Inc. (NASDAQ:NFLX) will post its second-quarter 2014 financial results and business outlook on its read on...

article imageLadenburg Thalmann Financial Services (NYSEMKT:LTS): Heavy, Durable Insider Buying

Ahh, but any worries over price levels didn’t stop multiple insiders at Ladenburg Thalmann Financial read on...

article imageInternational Business Machines Corp. (IBM) Q2 Earnings Preview: Small Beat and Pop

International Business Machines Corp. (NYSE:IBM) will host a conference call Wednesday, Jul. 16, 2014 at read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.