The Bond Market Is Interesting (for the first time in a decade)

We know you haven’t enjoyed this year in the markets. But one good effect of bad markets is better pricing and better opportunity for future return. Bad markets are good for long term investing.

This is the most interesting bond market we’ve had in more than a decade. Here are the changes in treasury yields this year- and over the past decade.

A New Era

Inflation has finally forced the Fed’s hand. For the past 17 years we’ve operated in a low inflation environment that didn’t punish us too harshly for money printing and big budget deficits. Interest rates trended lower over a few decades, and with borrowing costs falling, borrowing money became an easier political strategy than raising taxes.

Dog Days of the Bear Market

This has been a tough year for investment markets with rising interest rates producing a common result for investments of all kinds, in dollar terms:

This is Not The 1970’s

And that’s what makes a market. There are intelligent, experienced people in both camps. From our point of view, inflation is headed in the right direction with oil prices down pretty consistently over the past two months, with some retailers cutting prices, the housing market stalling, and with the prospect of some layoffs on the horizon.