09-04-2013, 08:11 PM
Sweet deal, Ronn!
I'm not so worried about the budget issues, but I am concerned with the QE taper. We may see money rotate out of dividend paying stocks and into bonds if 10 year Treasury rates go back up significantly. The 10 year was at 2.89% at today's close. My not so educated guess is that if we see the 10 year around 3.5% we may see a rotation into low risk 10 year bonds. Nobody really knows where rates are gonna go after QE gets turned off, but it wouldn't surprise me to see 10 year rates close to 4% once the taper is complete.
Of course, there are also folks that think that rising bond rates (and lower prices) will drive a rotation into stocks. I'm not smart enough to know which will happen, but I know in my own case (10 years from retirement) that I would welcome a chance to park a small portion of my port in a low risk vehicle yielding 4%.
I'm not so worried about the budget issues, but I am concerned with the QE taper. We may see money rotate out of dividend paying stocks and into bonds if 10 year Treasury rates go back up significantly. The 10 year was at 2.89% at today's close. My not so educated guess is that if we see the 10 year around 3.5% we may see a rotation into low risk 10 year bonds. Nobody really knows where rates are gonna go after QE gets turned off, but it wouldn't surprise me to see 10 year rates close to 4% once the taper is complete.
Of course, there are also folks that think that rising bond rates (and lower prices) will drive a rotation into stocks. I'm not smart enough to know which will happen, but I know in my own case (10 years from retirement) that I would welcome a chance to park a small portion of my port in a low risk vehicle yielding 4%.