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Treasurys’ Titanic Losses Make History
If you don't like to talk about bonds, you're at wits' end by now.
The financial pages are littered with chronicles of what, at this point, counts as the most dramatic long-end US Treasury selloff in a generation.
If you bought a long-end ETF in 2020, you bought the Nasdaq in 2000. Or the S&P in 2007. Or the Shanghai Composite in early June of 2015. Or tickets for the Titanic.
I used an S&P index to illustrate the magnitude of the drawdown in "What's Behind The Bond Bear?." The figu
Chef’s kiss for throwing the Titanic into that chart.
Trading like a penny stock indeed! Only (perhaps, a little) less manipulated?
I could see us looking back at this opportunity in long duration bonds like mega cap stocks late last year. Seemed like they were risky, but at the end of the day, the risk was pretty minimal given their cash flows. Inflation may be sticky right now, but if the market starts to break in earnest, rates can come down in a hurry and what better time to have bonds when the stock market would presumably be in turmoil?
If you’ve got time to wait it out, there are far worse options than sitting on 5% returns in the meantime, but what do I know?
I’m very curious as to how housing would react though. It seems that housing prices would shoot up if rates came down hard, but would that unleash supply or just create a zero sum game of buyers and sellers keeping prices afloat?
Great article! Thanks Walt
Thanks for the piece. I agree that things can only get so bad. Some of my stocks are down over 20% this month. I might think on buying a little, hoping rates don’t go up that much more.
Wits’ — proper typography, eschewed by all style guides (CMOS dropped it in latest version). Excellence.