More pain in Bondland

Bonds are having a bad day. In the aftermath of yesterday’s meeting of the Federal Reserve, rates are moving higher causing both stocks and bonds to move lower.

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The Trouble with Bonds

Whatever the Federal Reserve’s current and future decisions are regarding interest rates, it’s an important reminder that the Fed only controls the direction of short-term interest rates. The market controls the longer end of the curve. U.S. Treasury bond yields are a function of three factors: term premium, inflation, and economic growth expectations. Term premium,…

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The Death of 60/40: Where are we now?

At the beginning of 2022, I wrote a series, “The Death of 60/40.” The thesis was pretty simple. Real yields on bonds were negative, stocks were richly valued by historical measure, and the Fed had unleashed a monetary storm resulting in rising inflation. My conclusion that traditional stock and bond portfolios, especially passive index portfolios,…

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