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35-Year Bull Bond Market

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.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.
Timothy Davis
Director of Fixed Income

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