Treasury bond yields (^TYX, ^TNX, ^FVX) are on the move as markets push through the final trading day of the year. Crescent Grove Advisers co-chief investment officer Andrew Krei joins Wealth host Madison Mills to analyze market movements and share his perspective on Treasury investments heading into 2025.
Krei observes a recent decline in the 10-year yield (^TNX) but characterizes it as "an overshoot." He cites several factors that could impact yields in the coming year: the Federal Reserve's shift toward "a more hawkish stance," healthy nominal GDP (gross domestic product), and persistent concerns about growing US deficit levels.
"We kind of think that there's an asymmetric risk" for the 10-year yield, he explains, suggesting it could potentially exceed 5% in 2025. In light of these conditions, Krei recommends investors adopt a more defensive portfolio strategy.
Specifically, he suggests focusing on shorter-term fixed-income investments that currently offer yields in the low to mid-4% range, as these may provide greater stability compared to 10-year Treasury investments given the current risk landscape.
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"We just think right now there's a little bit more risk to upside for rates, so perhaps don't go all in to lock in that 4.5% Treasury 10-year yield right now," Krei cautions.
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This post was written by Angel Smith