{"id":66969,"date":"2023-09-29T17:38:14","date_gmt":"2023-09-29T21:38:14","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/how-10-year-treasurys-could-produce-20-returns-according-to-ubs\/"},"modified":"2023-09-29T17:38:17","modified_gmt":"2023-09-29T21:38:17","slug":"how-10-year-treasurys-could-produce-20-returns-according-to-ubs","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=66969","title":{"rendered":"How 10-year Treasurys could produce 20% returns, according to UBS"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002562285\" role=\"document\">\n<p>Carnage in the bond market in September could tee up an opportunity for investors to earn big returns on U.S. government debt in a year.<\/p>\n<p>Owners of 10-year Treasury<br \/>\n        BX:TMUBMUSD10Y<br \/>\n       notes at recent yields of around 4.5% could reap up to 20% in total returns in a year if the U.S. economy stumbles into a recession, according to UBS Global Wealth Management.<\/p>\n<div class=\"paywall\">\n<p>The key would be for U.S. debt to rally significantly as investors scramble for safety in the roughly $25 trillion treasury market.<\/p>\n<p>\u201cU.S. yields remain well above long-term equilibrium levels, providing scope for them to fall as the macroeconomic outlook becomes more supportive for bonds,\u201d a team led by Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management, wrote in a Friday client note.<\/p>\n<p>Their base-case call is for the 10-year Treasury yield to fall to 3.5% in 12 months, with it easing back to 4% in an upside scenario for growth, and for the economy\u2019s benchmark rate to tumble as low as 2.75% in a downside scenario of a U.S. recession.<\/p>\n<p>\u201cThat would translate into total returns over the period of 14% in our base case, 10% in our upside economic scenario, and 20% in our downside scenario.\u201d<\/p>\n<p><strong>See:<\/strong> The market \u2018may be overpaying you\u2019 on a 10-year Treasury, says Lloyd Blankfein<\/p>\n<p>A rally in Treasury debt could help boost funds that track the Treasury market and the broader U.S. bond sector. The popular iShares 20+ Year Treasury Bond ETF<br \/>\n        TLT<br \/>\n       was down 10.9% on the year through Friday, while the iShares Core U.S. Aggregate Bond ETF<br \/>\n        AGG<br \/>\n       was 3% lower, according to FactSet.<\/p>\n<p>A tug of war has been developing in the Treasury market, with fear gripping investors this week as bond yields spike in the wake of signals last week from the Federal Reserve that interest rates may need to stay higher for longer than many on Wall Street anticipated.<\/p>\n<p>\u201cBond vigilantes\u201d unhappy about the U.S. deficit have been demanding higher yields, while households and hedge funds have been piling into Treasury securities since the Fed began raising rates in 2022. <\/p>\n<p>Much hinges on how painful things get if rates stay high, which would ratchet up borrowing costs for households, companies and the U.S. government as the Fed works to get falling inflation down to its 2% target.<\/p>\n<p>Hedge-fund billionaire Bill Ackman this week said he thinks Treasury yields are going higher in a hurry, as part of his bet that the 30-year Treasury yield<br \/>\n        BX:TMUBMUSD30Y<br \/>\n       has more room to climb. <\/p>\n<p>The 10-year Treasury edged lower to 4.572% on Friday, after adding almost 50 basis points in September, which helped the stock market reclaim some lost ground in a dismal month, while the 30-year Treasury yield pulled back to 4.709%, according to FactSet. <\/p>\n<p>The Dow Jones Industrial Average<br \/>\n        DJIA<br \/>\n       posted a 3.5% decline in September, its biggest monthly loss since February, the S&amp;P 500 index<br \/>\n        SPX<br \/>\n       fell 4.8% and the Nasdaq Composite Index<br \/>\n        COMP<br \/>\n       shed 5.8% for the month.<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/how-10-year-treasurys-could-produce-20-returns-according-to-ubs-aeee6b89?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Carnage in the bond market in September could tee up an opportunity for investors to earn big returns on U.S. government debt in a year. Owners of 10-year Treasury BX:TMUBMUSD10Y notes at recent yields of around 4.5% could reap up to 20% in total returns in a year if the U.S. economy stumbles into a [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":66970,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-66969","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How 10-year Treasurys could produce 20% returns, according to UBS | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Carnage in the bond market in September could tee up an opportunity for investors to earn big returns on U.S. government debt in a year. 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