Long-end US Treasurys: They’re either a screaming bargain or an uninvestable falling knife.

We’ll find out which when Scott Bessent, without so much as a hint of irony, uses the next QRA to telegraph smaller coupon auctions in an attempt to replicate Janet Yellen’s late-2023 bond rescue.

I don’t know if Bessent will actually go that far. And he may not need to. A lot can happen in eight weeks. Pulling forward actual cuts to long-end auction sizes (as opposed to tweaking the QRA forward guidance again, this time to confirm cuts as an early-2027 event versus prior expectations of late-2027) would evidence an air of panic and could backfire. Maybe his buybacks will do the trick.

Whatever the case, we’re currently looking at the worst returns for 15 years-and-out US government bonds in a century, when measured on a 10-year rolling annualized basis.

The figure above’s a reminder: The long-end ETF remains more than 50% below its 2020 peak.

Stocks, by contrast, continue to hover near all-time highs on the back of a profit boom that’s more or less unprecedented outside of recession recoveries.

Note that the S&P’s notched — checks notes with a chuckle — 66 new records since Donald Trump’s second inaugural.

There’s the chart. Not too bad considering how many times the world’s ended over the past 19 months.

As any regular reader will attest, I’m the furthest thing from a fan of Donald Trump the president, although unlike a lot of his detractors, I don’t think it’s anyone’s place to pass judgment on Trump the private citizen. (“He that is without sin among you…”)

But my goodness, you can’t let politics completely corrupt your outlook on an asset class that everyone’s determined to keep afloat. That’s US stocks. They’re too big to fail. When you get in your political feelings, just remember there’s no money in that.

You’re not going to win any protest awards for sitting out equities during America’s experiment with autocracy. Nor, I’ll gently point out for those of you aggrieved that I don’t vote, are you going to flip a non-swing state with your get-out-the-vote campaign. All you’re going to do is waste your time. I live in red states. And trust me: They’re gonna stay red. I couldn’t even flip my neighbors, let alone the county or state.

Anyway, long-end USTs down 50%, stocks near enough record highs: It’s a helluva juxtaposition. In fact, it has the ERP loitering at -100bps.

As the figure reminds you, we’ve been negative on that RV metric since “Liberation Day,” when Trump’s tariff push and associated “Mar-a-Lago Accord” concerns raised questions about the reliability of US Treasurys.

Ostensibly, that makes bonds a bargain and stocks a bubble. “At present, equity risk premium is at some of the lowest levels since 2002, in the aftermath of the dot-com bubble,” BMO’s Ian Lyngen remarked, in his weekly. “This has raised the potential for sweeping asset reallocation flows away from stocks in favor of bonds.”

And yet, longer-end US Treasurys are showing exactly no signs of such a shift. The opposite, in fact, especially at the furthest reaches of the curve. It’s the same thing in gilts, OATs, JGBs and, to a lesser extent, bunds. Simply put: Sovereign duration’s even more friendless than I am, a pitiable state of affairs.

So, can ERP go lower? In a word: Probably. In several words, from Lyngen: “Given that overall US financial conditions are at some of the easiest levels of the past few decades, unless there is a more durable downtrade in risk assets or widening of corporate credit spreads, we estimate that there is still scope for the bond selloff to extend before flight-to-quality flows become a true limiting factor.”