We Love the US 20-Year Yield at RBA: Contopoulos

The video discusses the 20-year Treasury bond, highlighting its unique position in the market due to its higher yield compared to the 30-year bond. The lack of liquidity and scarcity of the 20-year bond are explored, along with potential market opportunities. The video also covers the corporate credit market, noting the challenges it faces, such as tight lending conditions and increased defaults, while suggesting that investment-grade corporates may still offer positive returns.

What makes the 20-year part of the treasury curve an attractive investment option?

• It has the lowest risk among treasuries.

• It is the preferred choice for pension funds.

• It trades with a higher yield than the 30-year.

• It is the most liquid part of the curve.

Why might the yield gap between the 20-year and 30-year treasuries narrow?

• Increased liquidity in the 20-year market.

• Higher issuance of 20-year treasuries.

• Decreased demand for 10-year treasuries.

• A rush to safety by investors.

What is a potential consequence of the Treasury Department issuing less of the 20-year treasury?

• More competition with the 10-year treasury.

• Lower demand from asset managers.

• Higher yields due to scarcity.

• Increased liquidity in the market.

What is a significant challenge currently facing the corporate credit market?

• A surplus of corporate credit issuance.

• An abundance of high-quality investment grades.

• Tight lending conditions.

• Decreasing interest rates.

How have rising interest rates affected floating rate debt?

• They have stabilized the market.

• They have increased the cost of financing.

• They have reduced the number of defaults.

• They have made it easier to finance.