It’s been a weird 1H for bond investors. The US 10yr bond yield started the year at 91 bps. Starting yields and forward returns have a very high correlation. No one came into 2021 thinking we’d see an above average year from long bonds (we likely will not, TLT is -7% YTD). Many portfolio managers and financial advisors shifted client portfolios away from duration risk and became willing to accept more credit risk. Short duration and alternative funds were the topic of conversation the past few quarters. Painted as the solution to poor expected bond returns and low yields. But has the landscape changed? Is now an opportune time to add duration risk - even as the long bond yield rests just above 2%?
What Are Bonds Telling Us?
What Are Bonds Telling Us?
What Are Bonds Telling Us?
It’s been a weird 1H for bond investors. The US 10yr bond yield started the year at 91 bps. Starting yields and forward returns have a very high correlation. No one came into 2021 thinking we’d see an above average year from long bonds (we likely will not, TLT is -7% YTD). Many portfolio managers and financial advisors shifted client portfolios away from duration risk and became willing to accept more credit risk. Short duration and alternative funds were the topic of conversation the past few quarters. Painted as the solution to poor expected bond returns and low yields. But has the landscape changed? Is now an opportune time to add duration risk - even as the long bond yield rests just above 2%?