US Long-term bonds are yielding almost 3% for the first time in a long time. While the 0.5% rise in rates contributed largely to the 10% fall in the DJIA last week, stocks have bounced back and are showing investors optimism in the market.
However, as interest rates continue to head upward this year, this may have an inverse effect on the bond portion of your portfolio. The US Treasury closed last Friday (2/16/18) at 2.88% which is up from the 2.41% it finished 2017 with. This is having a major effect on the overall bond market which shows that all US bond indexes are negative for the year (US Long Term Gov bonds 5.01% being the worst as of 2/16/18 according to Morningstar).
With a speech notes from the Federal Reserve Bank of Atlanta's President Raphael Bostic being released later this afternoon, we will hopefully get some insight into the thinking of the central bank on the interest-rate policy.
While the DJIA is up 2.37% and the S&P 500 is up 2.46% YTD (as of 2/16/18 according to Morningstar), you still need a way to protect against downfalls in the market.
A good question to ask yourself is, are bonds still the best place to do this?
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