The Fed has been buying government bonds to lower interest rates and stimulate the economy.
Since December 2008, U.S. Treasury bond prices have fallen, and yields have risen as a result. For example, the yield of 10-year Treasuries has risen from around 2% in December, to 3.55% today.
The problem is the Fed cannot keep interest rates from rising. Investors are not buying as many U.S. bonds, consequently bond prices go down and rates go up.
I would advise against buying long term U.S. government debt right now. I think bond prices have a ways to fall.
Expect higher interest rates in the future, not lower ones.
Ted’s passion is protecting and growing people’s wealth. He earned a Bachelor of Science degree in Finance from Florida State University and graduated at the top of his MBA class from the University of Miami, where he specialized in International Business. With more than 15 years of experience in the financial industry, Ted was trained in the World Trade Center by Morgan Stanley Dean Witter and was seasoned as a stock broker on Wall Street. He also has experience starting and running a successful financial firm. Ted is a valuable member of the Investor's Daily Edge staff as financial analyst and editorial contributor. Ted’s expertise is in showing investors how to invest and profit in natural resources, options, bonds, currencies, futures and stocks.
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Ted-
What do you think about high yield corporate (aka “junk bonds”)?