Yields on US government bonds is
always a favorite choice of investment for investors all over the world. The
numbers are higher than the dividend shares on Wall Street always make cheer
investors.
But bond yields United States (US)
with a maturity of 10 years (US 10 year Treasury) continued to decline in 35
years. In the 80s, the long-term bond yields in the US are still 14 per cent
figure. But in 2008, when the country experienced a crisis, to date, the long-term
bond yields are down in the range of 2 percent.
The yield on US long-term at this
time is equal dividend yield or profit from dividends from the index stocks S
& P 500. In the 80s, the dividend yield on the S & P 500 is in the
range of 6 percent and then dropped to 2 percent since 2008.
When bond yields are the same as the
dividend shares on Wall Street, a sign is this?
Chief Economist of PT Bank Central
Asia Tbk (BCA) David Sumual explained, declining yields on US long-term bonds
have occurred due to rising prices of these instruments. While the price
increase occurs because the demand is also high.
So far, the US bond market players
are always hounded especially the central bank because it is considered as the
safest instrument and serve as a save haven instrument. One country that pretty
much saving of US bonds is China. Currently China has hugged US bonds with a
value of approximately US $ 1.2 trillion.
"During this time of US bonds
has always been an option for the central bank to be used as reserves," he
explained. Even though the current US bond yields already at very low levels,
namely at 2 percent, but the value is still considered to be quite profitable
for investors.
"Compared with Japan, for
example are already close to 0 percent, yields on US bonds are still more
attractive. If you buy has Japan though it is safe as well but it was instead a
loss," he added.
David continued, with a meeting
point between the yields on long-term bonds with a dividend yield of the S
& P 500 also indicates that US bonds have been too expensive "So
bubble, the price is too expensive. It has been 30 years of bullish, "he
added.
Chief Economist of PT Danareksa
Institute, Kahlil Rowter added, if normal circumstances, should the current
state of the dividend yield of the S & P 500 is above the bond yield as the
stock market has its risks.
In the calculation, if US bond
yields stands at 2 percent, if coupled with the risk profile of the shares of
about 2 percent to 3 percent, the dividend yield on the S & P 500 is on the
level of 5 percent.
"But because since 2008, the US
economy experienced a decline in dividends from the companies included in the S
& P 500 also can not go up," he explained.
Kahlil continued, problems in US
bond yields also makes it difficult to make the US central bank to raise
interest rates. When China's economy is in decline, the Central Bank of China
chose to release some of their ownership of the US treasury.
"Its value is approximately US
$ 200 billion so this time so just stay US $ 1.2 trillion," he added.
Chinese monetary authorities step release of US debt to absorb the US dollar
thereby weakening the yuan to boost exports.
Step release of these bonds then
also followed by several other central banks are driving prices down and yields
rose. "Finally the instability occurs in the United States that may lead
to greater price volatility and bond yields. Therefore, the Fed can not raise
interest rates, "he said.
