Taps Coogan – April 2nd, 2021
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The following chart, from the Financial Times via ACEMAXX ANALYTICS, shows that the total return of long dated Treasuries (10 years and over) fell by the most since 1980, the last year before Paul Volcker crushed the inflation of that era and kicked off the 40 year bond bull market that may be ending right here and now.
With 10-year yields as low as they were this past winter (less than 1%), it took less than a 1% rise in the 10-year to produce this outsized loss. While the rise in rates may have run its course in the short term (or maybe not), at the current 10-year breakeven inflation rate, the 10-year would have to rise another 0.6% just to get long dated treasury holders to a breakeven real yield.
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