Being long bonds these days probably feels like being long tech stocks in the late 1990s. Every day you look at your portfolio, you expect it to be higher than the last time. This month through yesterday, the Merrill Lynch 10+ Year US Treasury Index is up over 10% and that doesn’t even include the rally we are seeing today. If the gains we have seen so far hold up into month-end, it will go down as just the 5th month since 1978 that long-term treasuries gained more than 10% in a single month. The last time we saw this large of a move in the long-term Treasury market was more than 10 years ago in November 2008, and before that you have to go all the way back to February 1986. In other words, this kind of move isn’t normal.
Besides the fact that long-term Treasuries are up over 10% this month, August marks the fourth straight month of gains for the asset class, and while that may not sound like much, the last time we saw a streak of four or more months of gains was in January 2015. With all these gains, the Merrill Lynch 10+ Year Treasury Index is up over 22% YTD. 22%! Start a two-week free trial to Bespoke Institutional to access our interactive Earnings Explorer, Triple Plays, and much more.