Skip to navigationSkip to content
HAVE A GOOD CRISIS

The market’s clear takeaway: Long bonds are beating stocks

Nobody expected it, (paywall) but the bond markets are having a heck of a year. The unrest in Russia and Ukraine, Iraq and Gaza are helping to drive global bond yields down from already low levels. A fresh scare in Ukraine on Friday sent yields on German bonds to all-time lows, for example, as they fell below 1.00%. (US yields followed suit falling to the lowest level in 14 months.)

no-caption

As interest rates fall, bond prices rise. And because of the special characteristics of bonds, the prices swings for long-maturity bonds—for instance the US 30-year Treasury bond—get larger the lower interest rates go. The upshot? Aggressive positions on long-term government bonds have been some of the best bets in the financial markets this year.

no-caption
Subscribe to the Daily Brief, our morning email with news and insights you need to understand our changing world.