Fertile crop of investing guru advice this weekend.

[bucolic_frolic]

Kathy Wood dropped a video calling for recession as unemployment rolls out unevenly based on declining profitability, but still touting the Laffer Curve as the basis for a Bull Run after that. I won't post the link. You know enough already.

Bravos Research, which is a data driven advisory firm from Luxembourg (I think), sees the crisis in US Treasuries.

Wealth Track has a new expert on the effects of tariffs globally.

?

[mahatmakanejeeves]

1. Bond prices have fallen by 50 percent since 2020? I have my doubts. NT

[bucolic_frolic]

2. Well, ChatGPT concurs on the 50% decline. Look at the TLT chart.

iShares 20+ Year Treasury Bond ETF

https://finviz.com/quote.ashx?t=TLT&ty=c&ta=1&p=m

ChatGPT:

Yes, U.S. Treasury bond prices—particularly long-term bonds—have experienced a significant decline since 2020, with some falling by approximately 50%.
📉 The Decline in Long-Term Treasury Bonds

The iShares 20+ Year Treasury Bond ETF (TLT), which tracks long-duration U.S. Treasuries, has seen its value drop by about 50% since its peak in 2020. This decline is attributed to rising interest rates initiated by the Federal Reserve to combat inflation.
Money Lowdown+3TastyLive+3Investopedia+3

Similarly, the 30-year U.S. Treasury bond has experienced a peak-to-trough loss of approximately 50%, marking one of the most significant downturns in the bond market's history.
Seeking Alpha

As of the latest data, the iShares 20+ Year Treasury Bond ETF (TLT) is trading at $87.73. This reflects the substantial decline from its previous highs.

📈 Impact of Rising Interest Rates

The primary driver behind this decline is the inverse relationship between bond prices and interest rates. As the Federal Reserve raised rates from near-zero levels in 2020 to combat inflation, bond yields increased, leading to a decrease in bond prices. Longer-duration bonds are more sensitive to interest rate changes, hence their more pronounced decline.
🔍 Broader Market Implications

This downturn in the bond market has had wide-reaching implications, affecting investment portfolios and prompting discussions about asset allocation strategies in a rising interest rate environment.
_________
In the above references, I assume they are quoting sources when mentioning Money Lowdown+3TastyLive+3Investopedia+3 and Seeking Alpha.

[mahatmakanejeeves]

3. Oh, an ETF, not the bonds themselves.

The iShares 20+ Year Treasury Bond ETF (TLT), which tracks long-duration U.S. Treasuries, has seen its value drop by about 50% since its peak in 2020. This decline is attributed to rising interest rates initiated by the Federal Reserve to combat inflation.
Money Lowdown+3TastyLive+3Investopedia+3

I look at Treasury Direct all the time, and I would have noticed a change of this magnitude.

Thanks, and good afternoon.

[bucolic_frolic]

4. You would also know that Treasury Direct is not an open market price. It's at issue.

TreasuryDirect Sells fixed rate bonds at public auction

Prices are based on current yields at time of purchase.

If you bought a 30-year bond in 2020 from TreasuryDirect yielding 1.2%, that bond today would also be worth ~50% less if sold on the market.

__________
Individual bonds have to be held to maturity to regain the face value. If you sold it in the open market, you would get far less because interest rates have risen.

[mahatmakanejeeves]

5. Thanks. I don't know who publishes those prices anymore, for

bonds traded on the open markets. TD yields now are 4.5% or so, give or take. On a phone; hard to check.

I hadn’t known that the older issues had fallen off that much.

Thanks again.

[progree]

6. And that doesn't take into account the PURCHASING POWER of the bonds, which have fallen by even more

CPI: https://data.bls.gov/timeseries/CUSR0000SA0
January 2020: 259.127
March 2025: 319.086

So even if the bonds had held their nominal value, their purchasing power would have declined to 81.2% of that amount.

If a $1,000 bond lost 50% of its nominal value, its purchasing power is down to 1000 * 0.50 * 0.812 = $406.

FOUR OH SIX!

[bucolic_frolic]

7. And even that is optimistic if you're buying a new car or a new roof!

Economies function more or less, but currencies are the metric that gets destroyed by politicians and bankers.