Federal Reserve

10 Year Treasury Watch

Recent news has led us to believe we may see this yield rise in the next few years. In 2008, the Federal Reserve attempted to stop the bleeding and stimulate the economy by purchasing government treasuries. Now, with a balance sheet of 4.5 trillion and interest rates historically low, they are potentially looking to unwind. Selling off their assets will lower the price of bonds and send yields upwards. An increase in this yield has several ramifications for your real estate. First, the value of your property will go down. As interest rates rise, cap rates follow suit, roughly three months behind. Higher cap rates lower the value of your property. Second, an increase in this yield makes other safe investment opportunities more attractive. Staying informed can allow you to make the best decision for you and your real estate.