Higher Yields Flipped The Math In The Investors’ Favor
Will 5.00% be the approximate ceiling for Treasury yields? Maybe, maybe not, but for bond investors, the risk-reward math is becoming very enticing even if yields rise further. Today's yields provide a loss cushion that did not exist three years ago, and a return asymmetry heavily in investors' favor. To appreciate this concept, consider that a bond's return over a specified period comes from the coupon earned and the change in the bond's price. The price change equals the bond's duration times the change in yield. The graphic below, courtesy of F/m Invest, shows that at today's yields, the…
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