Today I see that the 10 year treasury is popping a bit–up 7 basis points to the 1.54% – 1.55% area.
Logic tells us that with Fed tapering supposedly going on there is substantially less demand for all the paper that the Treasury has to sell. We have seen some firming of interest rates globally and minor reductions in quantitative easing which could possibly reduce demand for U.S. paper.
I will not be surprised to wake up one morning and find the 10 year popping into the 1.70 to 1.75% area in the month ahead. It is likely that this ‘pop’ will cost us a little capital, but by remaining in shorter maturity bonds and term preferreds losses should be very minimal.