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The weakening data from the US has caused long-term American treasury bonds to start moving upwards. This indicates that the interest rate peak may have been reached, making long-term American bonds attractive again. They are one of the world’s most liquid asset classes.
One practical way to get exposure to these bonds is through the exchange-traded fund iShares $ Treasury Bond 20+yr, which buys American treasury bonds with maturities of 20 years or longer.
Long-term American treasury bonds are one of the safest investments available, as they are guaranteed by the US government.
Currently, iShares $ Treasury Bond 20+yr offers a yield of 4.22 percent. The dividends are paid semi-annually, making it an attractive investment for those seeking regular income.
Year-to-date, the fund has remained unchanged, but over the past month, it has increased by almost 4 percent. Over the past three years, with high inflation and rising interest rates, long-term treasury bonds have been a poor investment, with the fund declining by 29 percent over that period. The annual fee is only 0.09 percent.
When interest rates fall, the price of long-term treasury bonds tends to rise. For those who believe that rates will decrease from this level, long-term American treasury bonds may be appealing now.
One of the advantages of long-term treasury bonds is their low or even negative correlation to the stock market, providing diversification in a portfolio, reducing overall risk, and protecting against market volatility.
Investments in treasury bonds are primarily for investors seeking safety and stability, especially in uncertain economic times. It is also a way to preserve capital while generating stable interest income.
Long-term treasury bonds can also be interesting as a diversification away from stocks and other more volatile assets. It is not uncommon for long-term American treasury bonds to have a negative correlation to the stock market.
Long-term American treasury bonds are particularly suitable for those seeking security, stable income, or diversification.
Analysis:
In conclusion, long-term US Treasury bonds are currently attractive investments due to the potential peak in interest rates and their safe nature as guaranteed by the US government. They offer a stable income stream, diversification benefits, and protection against market volatility. These bonds are ideal for investors seeking security, stable income, or a way to diversify their portfolio away from more volatile assets.