“If you look at government bond yields around the world, the U.S. is one of the higher yielding and certainly the highest quality.” Cummings, said in the article.
For instance, IEF, which has a 7.64 year duration, has a 1.97% 30-day SEC yield. The yield on benchmark 10-year U.S. Treasuries is 2.38%. In comparison, the 10-year Japanese government bonds yield is 0.45% and the 10-year German bund yield is 0.85%.
The yield on 30-year Treasuries is 3.13%, compared to 30-year Japanese bond yield of 1.59% and 30-year German bund yield of 1.78%. TLT, which has a 17.19 year duration, has a 2.83% 30-day SEC yield and ZROZ, which has a 27.34 year duration, has a 2.94% 30-day SEC yield.
Moreover, supporting the continued demand in U.S. government bonds, slow wage growth has kept a lid on consumer spending, and the low inflationary environment has kept fixed-income assets attractive – high inflation, on the other hand, would erode the real yield on bonds. Last week, a government report revealed inflation slowed to 1.4% in September, below the Fed’s 2% target.
“We are seeing continued low yield levels despite tapering because we still have no inflation pressure,” Jeffrey Klingelhofer, a money manager at Thornburg Investment Management Inc., said in the article.
For more information on the U.S. Treasuries market, visit our Treasury bonds category.
Max Chen contributed to this article. Tom Lydon’s clients own shares of TLT.