Treasury Yield 30 Years30-Year Treasury Bond?
As the name suggests, the 30-year Treasury yield (^TYX) represents the U.S. Government Bond with a maturity of 30 years and provides a guaranteed fixed interest rate. It is often referred to as the ‘long bond’ and favored as a haven for investors looking to guard against short-term risk.
US30Y is the longest yield but not taken as a benchmark like 10-Year Treasury, which is more important. The rate on the treasury bond is affected by different market factors that influence the federal fund, such as inflation expectations and demand for new longer-term debt, which tends to increase as interest rates fall. As a result, the yield on the 30-year Treasury Bond can also be used as an indicator of economic performance.
Bond Yield Calculation
When you buy the bond, you enter into an agreement with the government, in which it promises to pay you a fixed rate of interest each year. These are referred to as coupon payments, which are made twice a year, the first time in six months after the date of purchase of the security.
It is easy to calculate the bond yield/coupon rate when an investor buys the bond at face value without reinvesting the amount of interest.
For example, the face value is $1000 and the coupon payment $20 per year, which means the Coupon Rate/Bond Yield is 2% [(20/1000) *100]
Sometimes, bond prices fluctuate due to changes in interest rates, which can cause an investor to experience a yield that is above or below a face value.
Understand –>
30-Year Treasury Historical Chart
Here you can see how 30-year bond rates (^TYX) have been decreasing over the last three decades.
Source: treasury.gov
30 Year Bond vs Inflation vs Fed Rate
When inflation is on the rise, your money depreciates. The Federal Reserve System uses an important tool called interest rates to control inflation. Interest rates are how much money lenders charge to lend each other money.
But the thing is when change happens in interest rate it also fluctuates the Bond Rate, In the below chart you can see the positive relationship with these rates.
How to Invest 30-Year Bond
Well, a 30 Year Treasury Bond is a great investment instrument for those who want to invest safely and diversified. However, there are two circumstances that you should be aware of before purchasing one – the low rate of return and the interest rates affect.
For the investment, you can buy bonds from treasurydirect.com and also can go with ETF’s.
- ProShares UltraShort 20+ Year Treasury
- Direxion Daily 20+ Year Treasury Bull 3X Shares
- Direxion Daily 20+ Year Treasury Bear 3x Shares
- ProShares UltraPro Short 20+ Year Treasury
- ProShares Ultra 20+ Year Treasury
Check – How to Buy Nasdaq-100 ETF
Disclaimer – All the information is given only for education purposes, it should not be treated as investment advice
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