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Treasuries have been a hot topic in the financial media as yields tumbled on stock market strength.
In the 10-year note auction Thursday, demand for the government bonds was the lowest it had been in over a year, subsequently moving yields higher. A 30-year auction is expected to take place Friday.
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In an exclusive interview with Benzinga, TD Ameritrade Chief Strategist JJ Kinahan explained the implications of a strong and weak auction.
Related: IMX Indicates Retail Investors Slightly More Bullish Than April
Some analysts are fearful that a weak auction with high yields will cause a sell-off in dividend paying stocks because investors can secure income with a more stable security. Kinahan commented, “If you look back six or eight months when the taper began, I feel that nobody thought we would be looking at a 2.5 percent 10-year rate right now. They thought we would be talking a 3.5 percent rate.
"So, I think people may be a little cautious to jump into the yield game on fixed income until there is more of a proven, consistent track record over a few months.”
Conversely, Kinahan discussed implications of a strong auction.
“In the short term I think it may keep stocks a bit higher because if yields continue as low or lower," said Kinahan, "people are still going to be chasing the Verizons and Ciscos of the world, as examples of stocks that have yield above 3.2 percent.”
The yield on the 10-year treasury is currently 2.65 percent and the yield on the 30-year is 3.48 percent.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.