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35-Year Bull Bond Market

March 15, 2018

We hear a lot about the “35-Year Bull Bond Market” coming to an end, or have ended. Since September 7, 2017 the yield on the 10-year benchmark Treasury Note has increased from a 2.04% to 2.95% on February 21, 2018 before rebounding slightly to 2.84%.

Now if you back-up a year, the yield percentages look more pronounced. Again, on September 7, 2016 the yield was 1.53%. I don’t know what it is about September 7 – but in the last year and a half the yield has gone up 142-basis points. The “Long Bond” 30-year maturity has gone up 0.83% (83-basis points) as the Yield Curve has flattened

So does a rise of 0.83% on a 30-year bond make a Bear Market and does it end a 35-year Bull Market? Over the weekend I watched the animated film “Ferdinand” with my granddaughters and the market is even more PG than that film.

I can make the case that the 35-Year Bull Bond Market has actually ended five times over those many years and this past two isn’t one of them. Not even close. Take a look: the following yield movements and date will show you just how much a 30-year Treasury yield has moved on five different occasions.

Compared to the past 1.5-years the Bull Bond market ended five times in the past 35-years.

Recently pundits are calling for the 10-year yield to stay steady at around 3.00% for rest of the year or to climb to 3.50%. That’s an increase of 0.55% at the worst, or unchanged at the best. That doesn’t make a Bear Market. I actually would like to see a little more yield in bonds and if a little more loss in value of existing portfolios is the worst case in getting us a little higher yield, I’m all for it. After all, your individual bonds will return the principal at maturity.

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