How High Could The 10-Year Treasury Note Go | Why Long Bonds Are Up After The Fed Rate Cut

[@DiamondNestEgg]

💎Get our popular bond course bundle & save $80: www.diamondnestegg.com/home#_paa2isucf 💎Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners 💎Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters 💎And join our super-supersaver membership for regular market updates & monthly live member Q&As kzbin.info/door/nexoc6tvesvcCEzZhmI-Agjoin >>>>>>>>>> WATCH NEXT >> Our Bond Courses vs KZbin Membership | Which Is Right For You: kzbin.info/www/bejne/fmbLZXivnZWboNE >> Bond Beginners Course Sneak Peak | I-Bonds vs TIPS: kzbin.info/www/bejne/q4mzq5WgmpaaaKc >> Bond Masters Course Sneak Peak | How To Build A Bond Ladder: kzbin.info/www/bejne/pmqTenejjdNkb9U >>>>>>>>>> SOURCES & REFERENCED VIDEOS: PART 1 of Fed Rate Cute Series | Where To Invest After The Fed's 50 Basis Point Rate Cut | Will Rates Go Back To Zero: kzbin.info/www/bejne/rX2lqHZsf711qKc www.cnbc.com/bonds/ www.ishares.com/us/products/239454/ishares-20-year-treasury-bond-etf www.google.com/finance/quote/TLT:NASDAQ www.federalreserve.gov/mediacenter/files/FOMCpresconf20240918.pdf www.federalreserve.gov/monetarypolicy/fomcprojtabl20240918.htm fred.stlouisfed.org/ home.treasury.gov/policy-issues/financing-the-government/interest-rate-statistics www.treasurydirect.gov/auctions/upcoming/ www.fidelity.com/ >>>>>>>>>> Here is the overview for Bond Beginners: 1. Bond Basics What A Bond Is & How A Bond Works Why Invest In Bonds New Issue vs Secondary Market Bonds Interest Rates & Bond Prices Current Yield & Yield To Maturity Always Remember This! Buying At Par, Above Par & Below Par Different Types Of Bonds Wrap-Up 2. The Risks Of Bond Investing Seven Key Bond Risks Credit Risk Interest Rate Risk Reinvestment Risk/Call Risk Inflation Risk Liquidity Risk Currency Risk & Country Risk Bond Risk Mitigation Strategies Wrap-Up 3. US Treasuries Overview What Are US Treasuries Why Invest In Treasuries Where Can You Buy Treasuries How Are Treasuries Taxed Wrap-Up 4. Treasury Bills What Are Treasury Bills (T-Bills) When Do T-Bill Auctions Happen Where Should You Buy At Auction Auto-Roll When Buying At Auction Where To Find Recent Auction Results High Rate vs Investment Rate Reopening Auctions Cash Management Bills (CMBs) Buying & Selling On Secondary Market Wrap-Up 5. Treasury Notes & Bonds What Are Treasury Notes & Bonds When Do Auctions Happen Buying Treasury Notes & Bonds Auction High Yield vs Interest Rate Floating Rate Notes (FRNs) Treasury Zeros (STRIPS) Wrap-Up 6. TIPS (Inflation-Protected) What Are TIPS When Do TIPS Auctions Happen Nominal vs Real Yields Negative Yields How Do You Adjust TIPS For Inflation Taxes On Phantom Income Secondary Market Liquidity Wrap-Up 7. I-Bonds (Inflation-Protected) What Are I-Bonds How Does I-Bond Interest Work I-Bonds vs TIPS The Annual I-Bond Limit Wrap-Up 8. Agency Bonds The Universe Of Bonds What Are Agency Bonds How Are Agency Bonds Taxed Treasuries vs Agencies Who Might Want To Consider Agencies Yield-To-Call & Yield-To-Worst Where Can You Buy Agency Bonds Wrap-Up 9. Municipal Bonds Our Bond Universe Gets More Complex What Are Municipal Bonds How Safe Are Munis How Are Munis Taxed The De Minimis Rule Social Security & Medicare Premiums Treasuries, Agencies & Munis Who Might Want To Consider Munis Wrap-Up 10. Corporate Bonds Our Bond Universe Is Complete What Are Corporate Bonds How Safe Are Corporates Corporate Bond Hierarchies Five Key Features Of Corporate Bonds How Are Corporates Taxed Treasuries vs Corporates, Etc. Who Might Want To Buy Corporates Wrap-Up >>>>>>>>>> Here is the overview for Bond Masters: 1. Stocks vs Bonds Historical Performance Are Bonds Really Less Volatile Why Invest In Bonds Accumulation vs Decumulation Allocation of Stocks vs Bonds Wrap-Up 2. Which Bonds Might Be Right For You Treasuries & Other Types of Bonds Nominal vs Real Yields Inflation vs Non-Inflation-Protected Taxable vs Tax-Advantaged Accounts Wrap-Up 3. Bond Ladders & Other Bond Strategies Normal vs Inverted Yield Curve What Is A Bond Ladder 5 Important Bond Laddering Questions Laddering When Rates Are Rising Laddering When Rates Are Falling Laddering When Rates Are Uncertain What Is A Bullet What Is A Barbell Wrap-Up 4. Holding to Maturity vs Selling Early Why Hold to Maturity When To Sell Early Before Maturity Tax Implications Of Selling Early Wrap-Up 5. Individual Bonds, Bond Funds, Etc. Why Buy Individual Bonds Why Buy Bond Funds Bond Fund Considerations Key Bond Fund Concepts CDs vs Treasuries Other High-Yield Investments Wrap-Up 6. Our B.E.S.T. Model Portfolios By Age Our B.E.S.T Model Portfolios By Age Model Portfolios In The Industry B.E.S.T Model Portfolio Difference How Much Do You Need To Retire? How I Use The Rules of 100, 110, & 120 B.E.S.T Model Portfolios (20s) B.E.S.T Model Portfolios (30s & 40s) B.E.S.T Model Portfolios (50s & 60s) B.E.S.T Model Portfolios (70s+) Wrap-Up 7. The Decumulation Phase What Is The Decumulation Phase? Bear Markets & Recessions What Can You Do In Bad/Bear Markets Decumulation Tax Considerations The 4% Rule The Bucket Strategy The Flooring Approach Jen’s Bucket Strategy With A Twist Wrap-Up >>>>>>>>>> Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Everyone's financial journey is different. Please note that: 1) there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances 2) we will not ask you to call us or send us money in the comments on this channel or any of our other social media accounts, so if you see comment(s) along those lines, it is most likely spam - PLEASE DO NOT ENGAGE WITH SPAMMERS OR GIVE OUT YOUR PERSONAL INFORMATION FOR YOUR OWN SAFETY

[@TuckermanLane]

TLT price dropped over 2-3 weeks after the start of prior Fed cutting cycles, as in 2019 and before the Great Recession. So this decline over just one week is normal. Check this out with charts (TLT compared to FEDFUNDS) to see for yourself.

[@sandrahoward5512]

Schwab’s SWVXX is paying 4.94% and you can use the same funds to sell cash secured puts in a Roth IRA. Thanks, I really appreciate your videos!

[@cooldave88]

This is exactly what I do. A very fine strategy

[@S.A.1]

But they don’t have auto liquidation feature… like FZDXX in Fidelity

[@sandrahoward5512]

@@S.A.1 Thanks, I didn’t know that. I was assigned shares recently and it only took a few minutes to sell SWVXX to cover my assignment.

[@TechDude56]

Vanguards VMFFX is at 4.98%.

[@RagedContinuum]

wow I had no idea that was allowed - I need to do this asap

[@rickclark1372]

Interesting analysis! And this answers my pre-submitted question to today's upcoming live session. I will keep a lot of dry power. If a soft landing, will look for LT bond opps. If a recession, stock opps.

[@DiamondNestEgg]

Hi Rick! As an FYI, I’ve already added your question about DCA-ing to today’s Q&A, so Jennifer may be covering this in further detail then! Best - Eva

[@rickclark1372]

@@DiamondNestEgg Thank you! Though I wasn't as much asking about DCA per se as whether it is reasonable to anticipate recession/stock decline.

[@LouS-n4j]

Just found your videos by browsing this morning. Awesome Thank You!

[@tdkzd777]

The gold price is speaking to the contrary of a soft landing.

[@pierre-louis01]

Recently moved half of my money market fund to tlt... Now I'm somewhat perplex :-( You are an excellent pedagogue Jennifer!

[@brianborse3555]

Read the prospectus. TLT is for institutional speculation only. If we enter a rising rate environment, the holdings will continue to be sold off at a permanent capital loss. Good luck

[@pierre-louis01]

@@brianborse3555 TLT was rising well just before the rate cut. But now Jennifer has instilled me a doubt about the wisdom to bet on the long term american debt. My position is back at par...

[@davidv.2050]

After listening to your video Jen, I have to re-think what I should be doing when my treasury matures next week. Go short or go long. Or maybe buy another agency TVA.

[@michaelmcmullen354]

I suspect a factor making bond rates a bit flakey is simply the expected impact of federal interest payments on the bond market keeping the federal demand for funds high.

[@markwhitaker7887]

Yep, I think a strong market correction at the very least is coming. I've never seen a "soft landing" in my considerable memory.

[@brianborse3555]

Great video as always!! I hope you can educate us some day on the concept of Yield Curve Control (financial repression). I'm pretty sure that's in our future, if it's not being done behind the scenes already...

[@Gwinter452]

Hi Jennifer. Do you have any new updates for the 10-year Treasury note predictions? The announcement date is only a couple of days away.

[@MarionBlair]

IMO, rates have to come down as fed can’t afford the interest on the debt. We’ll die a slow death from the increasing debt.

[@imaprinta]

You're right, the country can't keep affording to pay high interest rates. The other side of that coin, however, is that we finance some of our deficits through treasuries and if they don't make the interest rate attractive, people won't buy them. It's going to depend on where worldwide inflation stands and if other countries feel they can get a better return elsewhere.

[@4hartrich]

@@MarkShinnickI’m sure they meant to say feds as in federal government… but they will very soon start monetizing the debt because they will probably have no choice unless they allow default….

[@imaprinta]

@@MarionBlair This from a simple Google search: The money from U.S. Treasuries goes to fund a variety of government programs and projects. The U.S. government borrows this money to pay for deficits that occur when spending exceeds revenue. The government sells securities like Treasury bonds, bills, notes, and floating rate notes to borrow money. The money raised from these sales goes towards paying off the debt. It is a long held and known policy.

[@imaprinta]

@@MarkShinnick simple search revealed this - The U.S. government borrows money to pay for deficits that occur when spending exceeds revenue. The government sells securities like Treasury bonds, bills, notes, and floating rate notes to borrow money. The money raised from these sales goes towards paying off the debt.

[@imaprinta]

I never said the fed pays the debt - but they set the interest rates that the treasury uses to borrow money that pays the debt.

[@jdo2574]

For those of you soft landing believers, Historical Correlation: The yield curve has inverted before every recession since 1960, making it a strong indicator. However, it's important to note that this doesn't mean an inversion always leads to a recession. Now add in how the US gov has closed the gold window and also spends money it does not have (money printing), how is a soft landing possible?

[@BK-gh9us]

Not as savvy as you, but I do know that you can't service the debt without printing it away. And you can't print without causing more debt. 🤷🤷‍♂🤷‍♀ No way out.

[@robandcindy2]

Closed the gold window?

[@4hartrich]

@@robandcindy2in 1971 closed the gold window, which is why we can have such high inflation

[@4hartrich]

And rates will be going down faster than they are projecting likely… we are in a recession now…

[@TheMinor7th]

Soft landing scenario is by no means out of the question, actually the most likely. With that said the bond market is telling us that a recession is very much on the table a few years down the road in ‘27 or ‘28. Another reason for the pop in 10yr yields is profit taking. Basically a buy the rumor sell the news on a great and relatively easy trade.

[@KayKay14m]

I own about 750 shares of TLT and will be holding for the long-term. At some point, TLT will go to 110 and even higher. This is where I am planning to start selling my shares. In the meantime, a higher yield should mean a good monthly dividend.

[@matrixist]

Sell at 130 in 18 months.

[@4hartrich]

GDI is more important than GDP…. Look at revisions that kept happening to 2008 even in 2018 to GDP. #’s were even worse in reality. GDP #’s are almost alway BS the first few estimates. GDI is so much more accurate. And the Fed is flying blind…..money supply is more important than interest rates.

[@7SideWays]

I'm a buyer of TLT at $96.50. $98.18 now with resistance/downward pressure.

[@Chiroman527]

Excuse my ignorance...What are TLTs? ❤

[@4hartrich]

@@Chiroman527 20 year government bond fund

[@Thisishard2333]

Thank you Jen. Sort of feel guilty watching football while your hard at work.

[@johnrac3302]

Same here. (Smile) But NYG are winning ! Thnx Jen 😊

[@meeddieok]

Lost my 2nd game of my parley card😢. I wonder if Jen will do a video of week 4 games. I could use the help.

[@ianollmann9393]

Neither party is at all interested in bringing down the deficit, so rising deficits seems like a foregone conclusion.

[@Nicole-zv7ee]

Jen, please make some videos, showing the process of how to buy short term treasuries/bonds. Thank you.

[@kimappreciateslife]

She has a million videos on how to buy short term treasuries short. Now it’s time to go longer into Treasury Notes and Bonds. Search her free videos

[@Nicole-zv7ee]

@@kimappreciateslife Ok, thank you!

[@ScooterOnHisWay2024]

Nobody does this better on YT than Jennifer does here.

[@lavague7648]

The recent upwards pressure of LT yields can simply interpreted as follows: market requires higher yields due to long term higher risk. What market see as risk is either higher lt equilibrium rates or recession. TLT holder , incl. me , bet heavilly in recession for capital gains. In soft landing scenario those gains diminish up to tlt nominal divident yields.

[@Tart523]

Let’s say I bought a five-year treasury yielding 4% today. In two years, this treasury would be a three year note and the yield should match current three-year treasuries. If the yield on three-year notes were to drop 1%, I would also have a corresponding capital gain. Is this correct?

[@adamgiorgio3236]

If you buy a 5 year treasury yielding x percent, you will get those coupon payments over the length of the bond and the yield will change based on what you bought it at and the future new issuances at the prevailing market rates at those times. If you bought at a discount, as time goes on, your bond will rise to par (your yield will fall to be roughly in line with prevailing maturities at that time but may not always be exact) You will need to look at the bonds duration which explains the change in a bonds price for a 1 percent change in rates. Longer dated bonds are more sensitive to interest rate changes but it also depends on your coupon payments. High coupon payments make your bond less sensitive to interest changes. You also need to factor in reinvestment risk which is the rate you can reinvest your coupons at. Technically all yields to maturity are higher than what they will actually be because it’s difficult to reinvest at the yield to maturity especially in this environment.

[@UltimateStaredown]

How about VCLT instead of TLT? Get some dividends on the way.

[@fastmph]

This tells me not to buy long dated bonds here.

[@darwinjina]

following the logic that I understood, then if the fed didn't expect a recession, then we don't need to cut the rates deeply or quickly.

[@Howard2006]

The FMOC projections are not very reliable but I agree it is a start. Interesting potential projection of higher 10 yr bond yields. What happened in 1995?

[@TimmieTennis]

Basically, soft landing means sell TLT as 10yr rates will settle around 4.5% in a normal economy, recession means hold TLT as disinflation or deflation kicks in and LT rates will revert to 3% or lower. I do believe if Dems win, rates will go back towards 5% to support long term debt auctions to support deficit spending. This in turn could cause a back door recession.

[@diffened]

@Timmie, Why Dems? Trump had biggest deficit for any 4 year president. Everybody thinks that Dems run up deficits more than republicans but the opposite is true. Look it up. Republicans always suck for the economy. They also kill people with their deregulation.

[@localvideosful]

Very valuable. Thank you

[@KikiAndJeffreyPearl]

There is still so much money in the system! I think the stock market will remain strong through out the end of the year. Thoughts?

[@BuzzBowen-d4e]

question. should I wait and see on 10 year or start averaging in?

[@DiamondNestEgg]

Hi Buzz. As I always say, everyone's financial journey is different & we are personally not going long on T-Notes or Bonds at the moment, but if you are retired or about to retire & are relatively risk averse, the yield on the 10-year T-Note is still quite attractive. As a point of reference, the last time it was near current levels before this cycle was in 2010. Could it go higher? Yes, but we don't know how long that might take. Plus, could it go lower? Also, yes - that's why we're generally fans of DCA-ing at the current time. Jennifer

[@MegaPapa8888]

When things become complicated and tricky, stop buying and start selling.

[@steve-on3234]

There is no way 10 yr can keep going up without then causing a recession. Now that inflation is down - Such would screw real estate and purchases too much such that it would cause deflation. A 5% 10 yr bond is equal to 8%+ mortgage rates

[@dsmith2858]

Thoughts on where the fixed rate portion on ibonds is headed?

[@DiamondNestEgg]

We will have an update next week!

[@ScottScott-b4h]

There's not a snowball's chance that we avoid a recession. Our national debt, which gets larger every year, far exceeds our GDP now, which is only "growing" (if you believe their numbers) at 2% annually. Time to get out of debt asap, put on your investing lifejacket, and prepare for another storm. I hope I'm wrong.

[@davidglaser1030]

say i have 5% 5 year corporate bond with a ytm of 5 years and a call date of years. Does the ytm reset for 2 years?.

[@DiamondNestEgg]

Hi David. If I am understanding what you are saying correctly - you have a 5-Year corporate bond with an annual fixed coupon of 5% (the actual interest payment that you get in cash paid out to you every year) & a YTM of 5% right now. The call date is years from now. If this is the example you want me to comment on - the answer is: your coupon of 5% does not change. So if you buy $1,000 par value of that bond with a 5% fixed coupon & a 5% yield-to-maturity right now, you will always get that 5% fixed coupon paid out to you every year in cash (e.g., $50 per year assuming it pays annually - or $25 every six months if it pays semi-annually). The yield to maturity will change over time though because it is based on market interest rates & the market price of your bond. I believe you are in both of our bond courses so if you need more clarification, please refer back to Module 1, Video E on Current Yield vs Yield-To-Maturity. Jennifer

[@davidglaser1030]

Thank you. Thank you for sharing your invaluable expertise

[@jimdixon6688]

Fidelty still paying 4.93 SPAXX. Would it be a good move to buy 500k worth of notes or sit in this SPAXX longer and wait and see.

[@g.t.richardson6311]

Nice problem to have

[@beanbean321]

I plan to stay . This is just emergency funds anyway.

[@jimdixon6688]

​@@retired8484When I get back to my computer I will check Fidelity again. We are holding cash in a Rollover IRA also. Have enjoyed the 5+% and now need to go somewhere MAYBE... I was thinking a big chunk into VOO & SCHD. I missed out on some of the Tech big climb but didn't bother us as we had ETFs that covered them.

[@jimdixon6688]

​@@g.t.richardson6311 Many years of God watching over and staying conservative on what I was buying and selling.

[@jimdixon6688]

​@@retired8484not sure if the first one went through. I will check when we get back to a computer to look at Fidelity SPAXX. Thinking dropping an equal amount into SCHD and VOO

[@coderider3022]

5% max on a 20yr.

[@yhe8942]

Can fed government or real estate industry bear ~5% 10-year treasury rate? I afraid not.

[@paulcoonce2493]

Should have raised 100. Money is too cheap. People are just spending other people's money!

[@Soobs123]

Anyone with 20 years left until retirement investing into fixed income products?

[@Gabber44906]

Why did bond yields go up? 30 year

[@Someone-lc6dc]

What about 20+?

[@moniequajohnson3094]

Recession

[@benzetang8335]

Why the yield of long dated bonds goes up? The most straightforward answer is that holders are selling, but why? I can’t get the answer yet

[@toinengwyn3935]

This is possibly a short term correction (e.g. profit taking) from overbought conditions on long term bonds.

[@Gabber44906]

Is TLT A BUY NOW?