December 27, 2023 3:36pm | 2 minute read
Option 101: Beginner’s Guide
Want to become an options master? Options expert Nic Chahine’s free report includes 4 perfect tips for beginners, the secret to earning 411% in options, and his proven success. Provides access to ‘plans’. Get your free copy of Options 101: The Beginner’s Guide as soon as possible.
The yield on the 30-year U.S. Treasury note fell below 4% on Wednesday, its lowest level since late July. A drop in long-term Treasury yields has recently triggered a significant spike in bond and real estate assets, as market participants increasingly bet on the possibility of a Federal Reserve rate cut next year.
Predict the Fed’s next move: Money market funds are currently pricing in a significant rate cut of 164 basis points through December 2024. The widely expected first rate cut in March 2024 now appears almost certain, with Fed futures showing a 90% probability of this scenario.
Enter to win $500 in stocks or crypto
Enter your email address to get Benzinga’s Ultimate Morning Update, a free $30 gift card, and more.
Chart: US 30-year bond yield below 4%
Advantages of bond investment: Under these circumstances, bond investment is in the spotlight.of iShares 20+ Years Government Bond ETF (NYSE:TLT), the world’s largest fixed income exchange-traded fund (ETF) by assets under management, has soared 21% since late October, marking a notable entry into the bull market.
This surge reflects the inverse relationship between bond prices and yields, a fundamental tenet of bond investing. The TLT ETF’s rise is partially driven by investor enthusiasm. In the past three months alone, the fund has seen more than $8 billion in net inflows, underscoring its growing appeal.
Also read: Long-term Treasuries enter a bull market: What lies ahead in 2024?
Invest in your future with options before you buy your next gift
Want to become an options master? With a special 90% discount, Nick Shine has full access to his top options plays, including the strategies he uses to rack up double-digit winners. Learn Nick’s proven strategies as soon as possible. You can buy it here for just $0.99.
Technological breakthrough: The key technical development in the long-term Treasury index is a rise above the 200-day moving average, which has not been exceeded since March 2023. This move is usually considered by technical chartists as a possible bullish trend reversal.
Relief to the housing market: The ripple effects of these trends extend to the mortgage market. Mortgage rates have been steadily falling as inflation shows signs of easing and the Federal Reserve signals further rate cuts.
The average interest rate for a 30-year fixed mortgage fell to 6.67% as of December 21, continuing a downward trend for eight consecutive weeks. These interest rates are the lowest since June and provide much-needed relief for homebuyers.
Also read: US mortgage rates fall to six-month low: Is this a turning point for the housing market?
Real estate sector gathering: of Real Estate Select Sector SPDR Fund (NYSE:XLRE) has emerged as the sector’s top performer over the past three months, taking advantage of an environment of lower expected interest rates and Treasury yields. The real estate sector represented by this fund has soared 19% over this period, highlighting how sensitive this sector is to changes in interest rates.
Read now: 12 reasons why Ed Yardeni is bullish on the S&P 500 index next year
Photo: Shutterstock
Option 101: Beginner’s Guide
Want to become an options master? Options expert Nic Chahine’s free report includes 4 perfect tips for beginners, the secret to earning 411% in options, and his proven success. Provides access to ‘plans’. Get your free copy of Option 101: Beginner’s Guide as soon as possible.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.