Auctions of 20-year US Treasury bonds were brisk, suggesting that structural demand for US debt remains strong. The historic rally in US debt continues and all losses this year have been recouped.Vanguard said this situation is favorable for an asset allocation of six stocks and four bonds.investPeople.
The Treasury Department auctioned $16 billion of 20-year government bonds on the 20th and won the bidYieldIt was 4.780%, which was slightly lower than expected. Becausedeeply concernedYields and prices are moving in opposite directions, indicating stronger demand than originally expected. After the results of the 20-year Treasury bond auction were announced, the U.S. The price of long-term bonds rose accordingly, giving buyers of these 20-year Treasury bonds an opportunity to gain something immediately.
Before the auction, traders were concerned that selling bonds during the week of the Thanksgiving holiday would reduce sales, undermining the recent rally in bonds. The United States auctioned $24 billion of 30-year Treasury bonds on November 9. Due to weak purchasing momentum, the bond market once fell.
Credit rating agency Moody’s said that despite recent volatility in the government bond market, structural demand for US debt remains strong; US debt supports the US dollar-based global financial system. The agency also said that US financial regulatory authorities have taken a number of actions to improve the flexibility and efficiency of the bond market, and the market structure is expected to continue to evolve.
Moody’s wrote: “Looking ahead, as the Federal Reserve (Fed) reduces its share of US debt, foreign central banks, pension funds, insurance companies and households will become stabilizing factors for the market.”
US bond prices have been rising rapidly recently. According to data compiled by Bloomberg, as of last Friday (17th), US bond prices have climbed 2.6% so far this month, leading to the best monthly performance since March. As of the 20th, Bloomberg U.S. The Treasury bond index had recouped all of its losses this year. The main reason is that inflation has slowed and growth has cooled, leading investors to believe that the Fed has finished raising interest rates and will start cutting interest rates before the middle of next year, So they rush to buy American bonds.
Given rising bond prices, Vanguard estimates that projected annual returns on US bonds will reach 4.8% to 5.8% over the next ten years. Before the US began its interest rate hike cycle, Vanguard had estimated that the project’s annual returns would be only 1.5% to 2.5% over the next ten years.
Pioneer also said the current state of its asset portfolio allocation of six stocks and four bonds is better than recent history. For long-term investors with a balanced allocation of stocks and bonds, the chances of achieving annual returns of at least 7% over ten years have increased. In 2021, the probability is only 8%, and now it has increased to 40%.