Where To Get Income In A Low-Yield World

The 10-year Treasury traded as low as negative 0.14 on January 31. Investors are guaranteed to lose money on it if held until maturity.
Low-to-negative rates make it challenging to generate income, and this may push investors into riskier assets such as non-investment grade and junk bonds.
A bond rally has driven Greek 10-year yields below 1 percent for the first time ever as income-starved investors pile into one of the few eurozone debt markets to.
One of the more popular ETFs, the Vanguard Total International Bond ETF (BNDX), is highly concentrated in some of the biggest issuers of debt that trades with a negative yield.
The Treasury Department last week sold as much as $19 billion of 30-year bonds at a record-low 2.061 percent yield.

(Source: istock)
So far in 2020, the yield on the 10-year Treasury has averaged an anemic 0.01 percent when adjusted for inflation. Since the end of January, it’s actually dipped below 0 percent, trading as low as negative 0.14 percent on January 31.
What this means is that investors are guaranteed to lose money on the 10-year T-note if held until maturity.
It’s against this low-yield backdrop that Judy Shelton, one of President Donald Trump’s nominees for the Federal Reserve Board, went before the Senate Banking Committee last week for her confirmation hearing. A former Trump campaign advisor, Shelton is seen as an unconventional pick for the central bank role for two main reasons: 1) She’s advocated for a return to the gold standard, and 2) She has recently argued in favor of lower interest rates - which could have the effect of pushing not just inflation-adjusted yields but also nominal yields into negative territory.
Some have already speculated that, if Shelton is confirmed and Trump wins reelection this November, she may be tapped to replace Jerome Powell as Fed chair when his term ends in 2022. During his tenure, Powell has repeatedly come under fire by the president for not cutting rates... Read more

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