Treasuries Bull Market That Began in 1981 Has Finally Ended
The U.S. Treasury building stands in Washington, D.C., U.S. (Photographer: Andrew Harrer/Bloomberg)

Treasuries Bull Market That Began in 1981 Has Finally Ended


The bull market in long-term U.S. Treasuries began in the early 1980s. It survived Long-Term Capital Management’s collapse, the dot-com bubble, the global financial crisis and the federal government losing its AAA rating.

The pandemic ended it.

The Bloomberg Barclays U.S. Long Treasury Total Return Index, which tracks bonds maturing in 10 years or longer, has plunged 22% since its peak in March 2020, putting the market in bear territory -- at least according to this metric.

“Bull market” and “bear market” are colloquialisms, not an official thing, and they’re more associated with stocks. But the rule for investors and journalists who use the terms is usually this: A bull market ends when something falls 20% from peak to trough, and the resulting bear market is over when it rebounds 20%. The Bloomberg index had roared higher by 4,562% between September 1981 and March 2020 without ever seeing one of those 20% losses. That streak finally ended this month.

“We’re in the midst of witnessing #BondMarketHistory,” tweeted Rick Rieder, chief investment officer for global fixed income at BlackRock Inc.

Treasuries Bull Market That Began in 1981 Has Finally Ended

Investors have dumped Treasuries as the U.S. government boosts the supply to fight Covid-19’s economic damage. President Joe Biden’s $1.9 trillion fiscal stimulus and the vaccine rollout has brightened the growth and inflation outlook, driving bonds down even more.

When Treasuries prices go down, yields goes up. Rates on 10-year notes hit 1.75% Thursday, the highest since January 2020. Those on 30-year bonds reached 2.51%, a level last seen in August 2019.

While sentiment on Treasuries has dramatically shifted, with investors like Ray Dalio and Bill Gross predicting more losses, not everyone has given up on the decades-long Treasuries rally. Scott Minerd, chief investment officer at Guggenheim, said this month that 10-year Treasury yields could drop below zero as a surge in cash holdings from the government stimulus finds its way into the fixed-income market.

A broader index that includes more Treasuries -- everything maturing in a year or more -- has declined about 6% since August, the biggest drawdown for the Bloomberg Barclays U.S. Treasuries Total Return Index since 2009.

©2021 Bloomberg L.P.

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