The Beta Trade

What’s been happening continues to happen.

After today’s Fed announcement, Treasury yields spiked along the yield curve.

It’s almost like a wave hit the yield curve — the later maturities turned first and the process gradually moved to the shorter-term maturities.

The 30-year yield bottomed in late August at 3.53%. It’s now up more than one full percent.

Then the 10-year yield bottomed on October 8th at 2.38%. It’s up by 118 points since then.

Then the 5-year yield bottomed on November 4th at 1.03%. It’s up 102 points since then, meaning the yield has basically doubled.

This is the Beta Trade. Money is going out of bonds and into riskier assets like stocks, and cyclical stocks in particular.

Here’s a look at the three-month, five-year, ten-year and thirty-year yields over the past two years:

Posted by on December 14th, 2010 at 3:27 pm


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