Bank of America
- The 10-year US Treasury bond is on track to suffer three consecutive years of losses.
- A back-to-back-to-back slump would represent the longest stretch of losses since 1787, according to Bank of America.
- The decline comes after US Treasury bonds suffered their worst annual loss since 1788.
Our Chart of the Day is from Bank of America and shows that US Treasury bonds are headed for their longest stretch of losses ever, dating all the way back to 1787.
The US 10-year Treasury is on track to see its third consecutive annual loss. The 10-year bond fell 3.9% in 2021, and tumbled 17% in 2022, which was its worst annual loss since 1788. So far this year, it's down 0.3%.
"10-year Treasury on course for third consecutive loss... has never occurred in 250-year history of US republic. Reflects staggering 40% jump in US nominal GDP (growth + inflation) since 2020 COVID lows," BofA investment strategist Michael Hartnett said in a Friday note.
The pain in bonds has been driven by aggressive interest rate hikes from the Federal Reserve. Since March 2022, the Fed has hiked interest rates 11 times, bringing the effective fed funds rate from nearly 0% to more than 5% today. As interest rates rise, bond prices fall, which is why bonds have performed so poorly.
Despite the long stretch of pain in fixed income, investors poured $1.7 billion into bonds this week, representing the 23rd straight week of inflows, according to BofA.