The current retracement in bond markets, a.k.a. “the global bond rout”, has awoken the Bond Bears from their embarrassed slumber. Embarrassed, because for years they have been incorrectly calling for lower bond prices, particularly in the US, without much success. The Bears are beginning to chant “we told you so”, but it is far too early for them to claim any form of investment superiority…
The following Bloomberg grab tells their sorry story:
This picture shows the total return from investing in US Treasury bonds since 2010. At the beginning of each of the five years from 2010 to the present, Wall Street had predicted higher interest rates and therefore bond market losses. In each of these five years, except for 2013, the Bears were wrong. For the five-year period to 2015, investing in Treasuries has produced a cumulative 21.9% return while at the same time remaining in cash would have delivered basically zero.
This is an appalling track record, and any Wall Street expert should reflect on their consistent underperformance before claiming victory in the current four week correction. If anything, the current sell-off offers them a dignified exit from what has been an horrific loss-making trade.