Bonds are tempting again: falling yields and rising prices
Perhaps the good time for bonds has finally come, after several failed starts. A little over a month ago, debt securities have started to show positive signs, with prices rising and yields falling. The rapid drop of more than half a percentage point in the rates of many medium and long-term issues is a positive sign for the sustainable recovery of prices: the yield on the ten-year BTp went from 5% in mid-October to the current 4.3%; that of the Bund of the same duration fell from just under 3% to 2.6%; while the Treasury US 10-year bonds went from 5.2% to 4.9%. Il Sole 24 Ore writes it.
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This indicates that investors are gradually changing their position with longer time horizons. Short-term issues have also seen price increases and yield declines, suggesting that the cost of borrowing may fall to mitigate restrictions imposed by central banks over the past year. Ptherefore, those who invest in medium and long-term bonds now have a high probability of obtaining profits in the coming years, considering the expectations of analysts and financial operators. There is widespread expectation that the Federal Reserve, the US central bank that continues to guide the markets, could start cutting interest rates from next June, which could further influence yields. However, according to some analysts, the Fed should move cautiously to avoid inflationary risks, considering the signs of a slowdown in the US economy.
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Many investment houses express optimism about opportunities in the bond market, highlighting the possibility of building portfolios that focus on medium and long-term emissions. While the bond market may be subject to more volatility at the start of the year due to an increase in new issuances, investors can adopt balanced strategies, positioning themselves in short-term and long-term securities to manage the overall risk of the wallet.
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