Declining Appeal of U.S. Treasuries Amid Rising Corporate Debt Interest
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 hours ago
0mins
Source: Newsfilter
- Rising Treasury Yields: The yield on the two-year Treasury note has increased by 60 basis points this year, surpassing 4.00%, primarily due to the energy price surge from the Iran war, which is expected to compel the Federal Reserve to raise interest rates, thereby heightening investor concerns about Treasuries.
- Strong Corporate Debt Performance: Many blue-chip companies have outperformed Treasuries, with Apple's two-year bond yield narrowing to just 3 basis points above the Treasury yield, marking a record low spread and indicating a growing appeal of corporate debt over government bonds.
- Credit Rating Discrepancies: Microsoft and Johnson & Johnson are the only U.S. companies to hold AAA ratings from the three major agencies, while the U.S. government no longer has a AAA rating, reflecting that the risk of lending to corporations is now comparable to that of Treasuries, prompting investors to reassess risk-reward dynamics.
- Long-Term Investment Concerns: While corporate debt is viewed as lower risk, investors must consider long-term repayment capabilities, especially amid escalating global AI competition, which introduces uncertainties about companies' futures and their ability to meet debt obligations.
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Analyst Views on AAPL
Wall Street analysts forecast AAPL stock price to fall
27 Analyst Rating
17 Buy
9 Hold
1 Sell
Moderate Buy
Current: 308.820
Low
239.00
Averages
306.89
High
350.00
Current: 308.820
Low
239.00
Averages
306.89
High
350.00
About AAPL
Apple Inc. designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related services. Its product categories include iPhone, Mac, iPad, Wearables, Home and Accessories. Its services include advertising, AppleCare, cloud services, digital content, and payment services. The Company operates various platforms, including the App Store, that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts. It also offers digital content through subscription-based services, including Apple Arcade, Apple Fitness+, Apple Music, Apple News+, and Apple TV+. Its wearables include smartwatches, wireless headphones, and spatial computers. Its products include iPhone 16 Pro, iPhone 16, iPhone 15, iPhone 14, iPhone SE, MacBook Air, MacBook Pro, iMac, Mac mini, Mac Studio, Mac Pro, iPad Pro, iPad Air, AirPods, AirPods Pro, AirPods Max, Apple TV, Apple Vision Pro and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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