There has been much talk about the equity market with the S&P 500 (INX) Dow Jones Industrial Average (DJI), and just about every other broad market index reaching new all time highs. Year end targets get more bullish by the day and even bad days get shaken off in a matter of trading minutes.
Silent in the background of all this chatter is the bond market. It seems like bonds have quietly fallen out of favor as the more exciting equity market dominates the financial news headlines. But let’s not forget the 10 Yr Treasury Note is the benchmark for mortgages, loan rates, inflation expectations, and a slew of other very important economic drivers.
A look at the 10 Yr chart has me thinking that rates are about to sneak up on 3% and in my opinion clear that hurdle. This would kick off the start of the Great Rotation in my mind as bond holders would have no choice but to flow out of fixed income.
I know we have seen S&P 500 year end forecasts, which are always fun to do, but let’s try our hand at the 10 Yr.
I think the 10 Yr will end the year above 3% and will have hit a high of 3.5%.
What about you? What will the high be for yields on the 10 Yr in 2014? And, will rates close 2014 above 3%?