{"id":818,"date":"2023-10-13T19:33:24","date_gmt":"2023-10-13T19:33:24","guid":{"rendered":"https:\/\/connectwithfund.com\/markets\/why-wells-fargo-sees-potentially-good-entry-points-in-long-term-bonds-after-yield-surge\/"},"modified":"2023-10-13T19:33:24","modified_gmt":"2023-10-13T19:33:24","slug":"why-wells-fargo-sees-potentially-good-entry-points-in-long-term-bonds-after-yield-surge","status":"publish","type":"post","link":"https:\/\/connectwithfund.com\/?p=818","title":{"rendered":"Why Wells Fargo sees potentially \u2018good entry points\u2019 in long-term bonds after yield surge"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002600195\" role=\"document\">\n<p>Long-term bonds look appealing to Wells Fargo Investment Institute after they were hurt by a surge in yields.<\/p>\n<p>Losses on long-term bonds recently deepened as rising yields sent their prices lower, with the rate on the 10-year Treasury note jumping to a 16-year higher earlier this month.<\/p>\n<div class=\"paywall\">\n<p>\u201cDespite rising yields, we remain favorable on duration and buyers of long-term fixed income,\u201d said Luis Alvarado, global fixed income strategist at Wells Fargo Investment institute, in a note dated Oct. 9. \u201cYields at these levels are potentially good entry points to consider for dollar-cost averaging.\u201d<\/p>\n<p>The substantial rise in U.S. Treasury yields over the past three weeks largely was influenced by the Federal Reserve vowing to keep interest rates higher for longer, with the hurdle to cut rates appearing \u201cquite high,\u201d according to the note.\u00a0<\/p>\n<p>Yet fixed-income portfolios stand to benefit as some investors anticipate a potential economic recession that may lead to rate cuts by the Fed in 2024. A drop in yields would be good for performance as that would drive up prices on long-term bonds, the chart below shows.<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<p>          <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>\u201cIn the past five Fed hiking cycles, we have observed that long-term yields tended to peak before the end of the tightening cycle,\u201d said Alvarado.<\/p>\n<p>The yield on the 10-year Treasury note<br \/>\n        BX:TMUBMUSD10Y<br \/>\n       was tumbling about 16 basis points on Tuesday to around 4.65%, according to FactSet data, at last check. Two-year yields<br \/>\n        BX:TMUBMUSD02Y<br \/>\n       were meanwhile down 11 basis points at around 4.97%.<\/p>\n<p>While the yield curve has been inverted, with shorter-term rates above long-term ones, yields on Treasurys with longer durations recently have risen in a so-called bear steepening.<\/p>\n<p>\u201cSo far, we have experienced what we call in bond jargon a \u2018bear steepening\u2019 of the yield curve,\u201d said Alvarado. That means \u201cyields on the long end of the curve have been moving higher (driving prices lower),\u201d he wrote \u201cwhile yields on the short end have remained flat, effectively causing a steepening of the curve.\u201d<\/p>\n<p><strong>Read:<\/strong> \u2018It\u2019s been a bloodbath\u2019: Long-term bond ETFs deepen losses after hotter-than-expected jobs report<\/p>\n<p>Wells Fargo doesn\u2019t see much keeping long-term yields from continuing their push higher because of several factors including expectations for increased Treasury issuance, rising debt levels, higher debt costs, \u201csome dysfunction in Washington\u201d and consumers that are so far resilient, according to Alvarado.<\/p>\n<p>Rising yields have pummeled exchange-traded funds that invest in long-term bonds, but as yields retreated on Tuesday, shares of the iShares 20+ Year Treasury Bond ETF<br \/>\n        TLT<br \/>\n       and iShares 10-20 Year Treasury Bond ETF<br \/>\n        TLH<br \/>\n        were down slightly in afternoon trading after rising sharply on Monday when the bond market was closed because of Columbus Day.<\/p>\n<p><strong>Read: <\/strong>How 10-year Treasurys could produce 20% returns, according to UBS<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/why-wells-fargo-sees-potentially-good-entry-points-in-long-term-bonds-after-yield-surge-166eab14?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Long-term bonds look appealing to Wells Fargo Investment Institute after they were hurt by a surge in yields. Losses on long-term bonds recently deepened as rising yields sent their prices lower, with the rate on the 10-year Treasury note jumping to a 16-year higher earlier this month. \u201cDespite rising yields, we remain favorable on duration and buyers of long-term fixed income,\u201d said Luis Alvarado, global fixed income strategist at Wells Fargo Investment institute, in a note dated Oct. 9. \u201cYields at these levels are potentially good entry points to consider for dollar-cost averaging.\u201d The substantial rise in U.S. Treasury yields<\/p>\n","protected":false},"author":1,"featured_media":819,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[],"class_list":["post-818","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why Wells Fargo sees potentially \u2018good entry points\u2019 in long-term bonds after yield surge | ConnectWithFund<\/title>\n<meta name=\"description\" content=\"Long-term bonds look appealing to Wells Fargo Investment Institute after they were hurt by a surge in yields. 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