At the start of 2014, we saw a great many forecasts about how bad the market would be for bonds. Interest rates were sure to rise, and that would topple bonds. While most investors focused on stocks in 2014, bonds have been having a great year. The forecasts were completely wrong, as this post details. In January you’ll see a lot of stories about how great an investment bonds were in 2014. As usual, most forecasters were wrong, and most investors were focused on the wrong things.
But what if investors are looking for a melt-up in the wrong place? What if the real melt-up is already occuring in one the most boring asset class of all — long-term U.S. treasuries?
Long bonds have been on fire this year as they’re currently one of the best investments of any asset class. The iShares 20+ Year Treasury ETF (TLT) is up over 28%. From a historical standpoint, were that number to hold up through year end, it would be one of the best years ever for long bonds.