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.)

Yield-on-the-10-year-German-bund-1-00-_chartbuilder (1)

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.

Long-term-bonds-of-safe-haven-countries-have-been-a-good-bet-Return-so-far-this-year_chartbuilder
home our picks popular latest obsessions search