Do you remember the old adage, stock up bonds down? Well, that's what has been happening during the recent stock market rally. Since March, US treasuries have dropped about 900 basis points or $9000.00. Now remember that the price and the yield go in opposite directions. As the price goes down, The yield or interest rate goes up.The yield on the 30 year US bond stands at 4.21%

Why is the yield so important? For one thing if interest rates go up, mortgage rates will also rise. The Federal Reserve has vowed to bring mortgage rates down to help the housing market. It even took the bold move of buying treasuries to pump more money into the banking system. So far, the Federal Reserve has bought $300 billion of US treasuries.

Continue reading Why are US treasury yields rising?

Why are US treasury yields rising? originally appeared on BloggingStocks on Tue, 19 May 2009 14:20:00 EST. Please see our terms for use of feeds.

"In the wake of the worst sell-off since 9/11 for most major European and Asian markets, our Fed finally stopped telling us that the building is on fire and entered the building to rescue what it can with an emergency 75 basis point rate cut," notes Jim Lowell.

The editor of Fidelity Investor explains, "The uppshot is that while the rate cut comes too late to cure what's ailing the markets, it does come as a welcome bowl of chicken soup which will help re-nourish the markets over time; look for more bowls of soup (in the form of more rate cuts) to come."

Lowell continues, "For long-term investors like us, time is on our side. After today's sell off, the standard value indicator for whether the markets are over- or under-valued continues to make the case for stocks being the best long-term buy.

"The P/E on the S&P 500 is hovering around 13 - it was north of 16 just a month back; but even a P/E of 16 is a value call. Bonds of every type and duration, on the other hand, are selling at historically high prices and yielding a
paltry sum. Meantime,

"the US dollar, dinged in knee-jerk reaction to today's Fed rate cut, is likely to gain strength as we wend our way through the next several months since the reality of recession is no longer a US but now a global phenomenon and that bell will toll for foreign currencies.

"Against this backdrop, the dollar will be a solid buy for near-term volatility, bonds will trade on the psychology of fear and uncertainty and US stocks will be the best value for long-term money."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

US stocks still remain 'best value' originally appeared on BloggingStocks on Tue, 22 Jan 2008 13:10:00 EST. Please see our terms for use of feeds.