QE2 Joins Eisenhower Yields in 1% Returns for Bonds

Wall Street’s biggest bond-trading firms say investors in U.S. government debt will barely break even next year as yields climb from the lowest levels since the 1950s and the Federal Reserve boosts economic growth.

Investors buying benchmark 10-year notes will gain about 1 percent in 2011 once interest payments are re-invested, as the yield rises to 3.65 percent after averaging 3.2 percent in 2010, according to a Bloomberg News survey of the Fed’s 18 primary dealers. Bank of America Merrill Lynch’s U.S. Treasury Master index returned 8.15 percent annually since its start in 1978.