The one question that has been driving the markets mad for months is the actual timeline of the first Fed rate hike since 2006. Though a soft start to 2015 due to a harsh winter and congestion in West Coast port poured water on the guesswork for a while, strong job numbers, sturdy retail reading, decent automobile sales rise and optimistic housing numbers in the ongoing second quarter have once again heightened speculations for sooner-than-expected policy normalization.
Most market participants now expect the Fed to tighten its policy in September. In anticipation of the rate hike, interest rates rose in June. Following the latest spate of stronger readings yields on U.S. benchmark 10-year notes touched the 2.50% mark – the highest point of this year – on June 10, though it started slipping from the very next day on a safe haven appeal due to ‘Grexit’ concerns. However, the respite was short-lived as easing Greek debt deal worries stole the safe-haven charm from Treasuries and caused rise in yields again.
As yields on benchmark government debt started to rise, several income generating avenues fell out of investor favor. Many investors started to move out of the income-producing securities and look for benchmark treasury yield beating options that offer decent capital gains in a choppy market.
Below, we have highlighted two ETFs and stocks yielding around 4% or more. These could be interesting plays for investors in the days to come: