The Modern Investor

 Written by Human Advisors, for Human Investors

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Time to Buy Bonds?
Bonds Eric Blattner Bonds Eric Blattner

Time to Buy Bonds?

Is it time to buy bonds?

This question has become much more common as interest rates have risen. Recently, the yield on 10-year U.S. Treasury bonds hit 5% for the first time since 2007. Many money market mutual funds (say that five times fast!) are yielding over 5%.

So, are bonds a good buy now? Here are a few considerations before pulling the trigger.

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5% Money Market Yields. Pros and Cons.
Bonds, Cash Management Eric Blattner Bonds, Cash Management Eric Blattner

5% Money Market Yields. Pros and Cons.

Cash is cool. Interest rates on money market funds are well over 5%. The 3-month U.S. Treasury Bill yield is 5.5%. Assets in money market funds are at all-time highs, nearing $5.5 trillion. Some people have asked if they should be investing in stocks or other asset classes when they can safely earn 5%. Here are a few things to consider when trying to answer that question.

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Three Things About Higher Rates
Economy, Bonds, Stocks Eric Blattner Economy, Bonds, Stocks Eric Blattner

Three Things About Higher Rates

Interest rates on bonds haven’t been this high in about 15 years. Whether you consider this to be good or bad news may depend on your perspective. Higher rates generally offer a better starting point for bond investors, and high-quality bonds may be in a better position to offset other risks in your portfolio. Stock investors traditionally have been willing to pay less (in terms of P/E multiples, for example) for expected earnings as interest rates rise, which can put pressure on stock returns. Regardless, history has seemed to reward stock owners over the long term, even in periods characterized by higher interest rates.

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The Most Boring Market Update Ever?
Stocks, Bonds Eric Blattner Stocks, Bonds Eric Blattner

The Most Boring Market Update Ever?

It’s mid-July, which means firms like ours have been busy publishing quarterly recaps and market outlooks for the remainder of the year. How it would sound if we focused not on the last 90 days, but rather recapped the last 10 years. After all, we constantly talk about long-term investing, so why not write commentary to match?

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