Joseph Adinolfi is a markets reporter at MarketWatch.
Volatility in the typically staid Treasury market has helped lure billions of dollars into popular bond funds as investors have jumped at the opportunity to lock in the highest yields in 16 years.
As the chart below from strategist Charlie Bilello shows, with yields around 5%, investors can expect 5.4% annualized total returns over the next seven years. Even before that, returns were tepid compared to stocks. After trailing returns in the stock market for most of the postcrisis period, Treasury bonds issued when interest rates were near-zero have more recently saddled investors with eye-popping losses, with some 30-year bonds down more than 50%.But more recently some investors have seen a silver lining. As Treasury yields have surged, money has poured into the iShares 20+ Year Treasury Bond ETF TLT, the most popular Treasury ETF.
But with interest rates higher than they’ve been in two decades, the coming years aren’t looking as favorable for stocks. As MarketWatch noted last week, the potential benefit of owning stocks over bonds has shrunk to its lowest level in 21 years, prompting some to question whether stocks are still worth the additional risk.What’s more, “bond math” shows investors likely have more to gain than they have to lose from buying bonds at these levels.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Oil prices stable after weak economic data as traders await supply dataJoseph Adinolfi is a markets reporter at MarketWatch.
Read more »
Wall Street is again worried about an imminent recession. Here's what the data show, and what it might mean for your portfolio.Joseph Adinolfi is a markets reporter at MarketWatch.
Read more »
Oil prices tread water after wiping out more than half of October's gainsJoseph Adinolfi is a markets reporter at MarketWatch.
Read more »
Dow opens higher, lifted by Microsoft’s post-earnings rallyJoseph Adinolfi is a markets reporter at MarketWatch.
Read more »
Trading in some stock options halted for second time in a week as exchanges hit by outageJoseph Adinolfi is a markets reporter at MarketWatch.
Read more »
Nasdaq finishes in correction territory after worst day since FebruaryJoseph Adinolfi is a markets reporter at MarketWatch.
Read more »