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#1Best of 2023: 10-Year Treasuries, Rising Yields & More!

Global investors were shocked when they realized that the US Treasury had reported the worst 10-Year Treasury Yield of the year in October of 2023. This sudden decrease in yield has caused many investors to adjust their portfolios due to the volatile market conditions. Here’s what the top five charts of 2023 in the 10-Year Treasury Yield will look like. Chart 1 – Yield Curve: The yield curve shows the difference between the yields of shorter-term and longer-term bonds. As of October 2023, the yield curve is relatively flat, which indicates that there is little difference between the yields of both short and long-term treasury bonds. This could indicate a potential decrease in the yield in the upcoming year. Chart 2 – Projected Interest Rates: Projections for interest rates in the upcoming year are more optimistic, due to the recent decrease in the 10-Year Treasury Yield. The median prediction for the yield by the end of 2023 is 2.3%, however many economists believe that it could drop even lower. Chart 3 – Bond Duration: Bond duration is an important factor to consider when choosing an investable bond. Currently, the duration of the US 10-Year Treasury Bond is 8.13 years, indicating that there could be a potential increase in the value of the bond in the upcoming year. Chart 4 – Risk Premium: Risk premium is the difference between the yield of bonds that are riskier than US Treasury Bonds and the yield of US Treasury Bonds. This has been increasing steadily since the downturn of the US economy. The current risk premium is hovering near 0.5%, indicating the minimal added risk of other bonds. Chart 5 – Credit Spread: Credit spreads is the yield difference between high-yield and investment-grade bonds. Recently, credit spreads have decreased, as investors are, willing to take on more risk in the bond market. The current spread is close to 0.65%, indicating that investments in high-yield bonds are very attractive to investors. In summary, the 10-Year Treasury Yield is currently the lowest of the year, however many investors are still eager to invest. The bonds may have low yields, but the high credit spread and potential increase in bond duration makes them attractive investments. With the uncertain market conditions, investors should be aware of the potential risks that come with high-yield bonds.