Treasuries starting to scorch investors


Even though investors have been winning big when it comes to Treasuries over the last years, it is obvious that things are going to change now. Many investors have already began cashing out and dinging all their portfolios. The current yield for treasury notes has increased over the past few months. Stock market experts believe that this is the highest spike they have every witnessed over the past year.

‘’ when you are always dealing with a financial environment that revolves over low interest rates, there could be serious implications for investment portfolios,’’ said Nathan Barnes, senior income manager for National Penn Trust. For example, if you have purchased treasuries that are worth $200,000 last month when the yields were 2%, this will result in a $3000 loss if you decide to cash your money today. The older the time you purchased these treasuries, the more you will probably lose now. This is the opposite of what usually happens when the longer the investor wait, the more money they will make.

You will probably have lost more money if you purchased these notes in July as the yield decreased to 1.4%. During the previous months, funds for bonds have also decreased. For example, the bonds for investment company Pimco decreased by 4% and Barclay’s bonds decreased by 2.3%.

Many business experts believe that yields will continue decreasing for the next months and this is mainly due to treasuries being oversold all the time. If the economy ends up rebounding sooner than expected, the federal government will end up intervening in the market and this will end very swiftly. It is also expected that unemployment rates will decrease 6.5% and prices will drop.

If the economy of the United States doesn’t end improving, most bonds or treasuries will provide profitable returns to all of the investors and companies. This will result in offsetting the losses that took place previously in the stock market. This is very beneficial for investors or companies who have invested or lost millions in the past.

The stock market in the United States has definitely been suffering in the last few months especially because of the fiscal cliff problem. Even though a deal has been reached in Washington, many business experts believe that the stock market will take some time to fully recover. Many large corporations who are dominating the market such as Apple are currently suffering and their stocks have been decreasing over the past few days.