Treasury yields are falling again as President Barack Obama’s re-election has boosted speculation that the Federal Reserve will stick with quantitative easing and bond buying. Renewed fears over Greece and the Eurozone debt crisis have also pushed investors into Treasuries with yields on the 10-year note falling back to the 1.6% range.
The low yield environment is going to linger for some time if the Fed has its way, forcing investors to continue their search for income-producing exchange traded funds and investments.
“With an Obama win, the status quo at the Fed remains,” Chris Ahrens, an interest-rate strategist at UBS Securities unit, said in a report. “The market took a pause, and now it’s starting to rally on the anticipation we’re going to embrace the arguments surrounding the fiscal cliff. It’s the same cast of characters negotiating the same issues.”
Treasuries have returned 1.8% in 2012 and 15% since Obama was inaugurated in 2009, according to Bank of America Merrill Lynch indexes.
The fiscal cliff focuses on $600 billion in tax hikes and budget cuts that will pan out early next year, reports Cordell Eddings for Bloomberg. With the aforementioned in focus, searching out a combo of income, low-risk and stable growth may seem like a tall order. Neena Mishra for Zacks reports that there are a few ETFs that can deliver.
The PowerShares Emerging Markets Sovereign Debt Portfolio (NYSEArca: PCY) tracks a virtual portfolio of liquid emerging market bonds denominated in U.S. dollars, from 22 countries. Emerging markets sovereign debt is hotter than any U.S. debt for the time, and the low correlation to developed markets is a diversification plus. PCY has a 4.7% yield, and has given back 18.9% year-to-date. [Emerging Market Bond ETFs: Looking Overseas for Yield]