Investment Opportunities

Interest Rate History

Is the Bottom in Rates Finally Here?

 

10 Year Treasury Interest Rates

10 year graph

 

Managing the Next Interest Rate Cycle

Not many fixed income managers today were managing fixed income portfolios during the last bond bear market from the 1950's through the 1970's

Need a strategy that can potentially do well during the next bear market interest rate cycle


Past performance is not indicative of future results.

 

Lost Decades

 

Years 10 Year Treasuries Avg. Annual Return Average Annual Inflation Rate

Average Annual Real Returns

1950s 0.78% 2.05%

-1.27%

1960s 2.43% 2.33% 0.10%
1970s 5.41% 7.06%

-1.65%

1950s - 1970s 2.86% 3.79%

-0.93%

 

Bond Bull Market

 

Years 10 Year Treasuries Avg. Annual Return Average Annual Inflation Rate Average Annual Real Returns
1980s 10.96% 5.27% 5.69%
1990s 5.85% 2.93% 2.92%
2000s 4.31% 2.56% 1.75%
1980s - 2000s 7.59% 3.61% 3.98%

Source: Bloomberg
Past performance is not indicative of future results.

 

Impact of Rising Rates

The effect of a 1% rise in interest rates on U.S.Treasuries

 

10 year graph

Source: JP Morgan. *Data as of Change in bond price is calculated using both duration and convexity according to the following formula: New Price = (Price + (Price * -Duration * Change in Interest Rates))+(0.5 * Price * Convexity * (Change in Interest Rates)^2). Investors cannot directly invest in an index and unmanaged index returns do not reflect any fees, expenses or sales charges.

Past performance is not indicative of future results.

 

Treasury Bond Performance

Treasury Bonds typically do well when the economy is flat to declining but NOT when the economy is growing/accelerating

 

Positive Markets


Declining

Negative Markets

Growing

It appears we’re in a growing economy

 

 

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