Is the 30-year Bull Market for Treasuries Already Over?

I’m curious if the bond market passed an important and in fact, generational moment and few people realized it. We may look back at September 2011 as the peak of a 30-year bull market in U.S. Treasuries.

On September 16th, the one-, two- and three-year Treasuries yielded, respectively, 0.08%, 0.16% and 0.29%. Those were the lowest yields for those securities in decades.

Three days later, on September 19th, we saw generational lows in the five-, seven, 10-, and 20-year Treasuries. The respective yields were 0.79%, 1.24%, 1.72% and 2.48%. (The 30-year T-bond deserves a slight asterisk because it reached it lowest yields in late 2008.)

Of course, Mr. Bernanke and his friends have been aiding the latest surge into bonds, but let’s add some context. Almost 30 years to the day before, the 10-year hit its peak yield. On September 30, 1981, the ten-year yielded 15.84%.

Last week, the 20-year TIPs yield dropped to 0.43%. In February, it was going for 2%. The 10-year TIPs is still slightly negative.

I don’t expect to see dramatically higher yields in 2012, but it makes sense to see yields rise. Investing in Treasuries has been a winning trade for so long that I think investors may have forgotten that it doesn’t always go this way.

Posted by on December 29th, 2011 at 11:16 am

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.