Will we see a repeat of the "taper tantrum" of 2013? Over the past 3 months, the 10-year Treasury rate has increased by some 40 bps, to its current level of 1.85%.
10 Year Treasury Rate data by YCharts
While the broader U.S. equity market, as represented by the SPDR S&P 500 Trust ETF (SPY), has only seen mild declines (-1.61%) over this time frame, interest rate-sensitive securities have taken it on the chin. The PowerShares S&P 500 High Dividend Low Volatility ETF (SPHD), a popular high dividend low volatility fund, lost -4.91%. Long-term Treasuries, as represented by the iShares 20+ Year Treasury Bond ETF (TLT), lost -7.35%. The Vanguard REIT Index ETF (VNQ) has dropped by -12.4%.
SPY Total Return Price data by YCharts
In terms of U.S. corporate bonds, there has been a clear bifurcation of investment-grade and non-investment grade ("high yield" or "junk") debt over the past… Read More …