Rising Bond Yields Offer Opportunities in Leveraged Funds

While the U.S. Federal Reserve continues to wrestle with inflation, bond yields continue to move higher, offering opportunities for both bearish and bullish bond prices in the short term.

In the meantime, yields continue to climb to new peaks as the Fed’s higher-for-longer narrative continues to feed into higher borrowing costs. As result of this push-pull dichotomy, it’s pushing bonds lower, but offering attractive yields especially for corporate bonds.

“Since late July, the yield, or rate, on the 10-year U.S. Treasury note has jumped from around 4% to about 4.8%, a 16-year high,” reported ABC News. “The run-up in the yield has inflated other borrowing costs and raised the national average 30-year mortgage rate to 7.5%, according to Freddie Mac, a 23-year high. Business borrowing costs have also risen as corporate bond yields have accelerated.”