Where will interest rates and bond prices be without Federal Reserve intervention - something, it seems, the Fed plans to continue? A new report gives us some clues.
Historically, real rates of return on 10-year U.S. Treasury bonds have averaged approximately 2.44 percent. A "real" rate of return is what you make after inflation, or the current yield on the bond, minus inflation.
Currently, real rates of return on 10-year Treasuries are close to zero (current 10-year U.S. Treasury yield of 2.00 percent minus 2.00 percent inflation rate equals 0.00 percent). That may return to normal levels once the Fed finally exits its current bond-buying policies, according to a new research report from Don L. Riley, chief investment officer at Wiley Group, a Conshohocken- based retirement-investment advisory firm.