This hadn’t happened on the U.S. Treasury market in 250 years. Now it has.


The 10-year Treasury bond is on track for a third year of losses in 2023, something that hasn’t happened in roughly 250 years of U.S. history.

In short, it has never happened, say strategists at Bank of America.

The return for investors putting money in that bond BX:TMUBMUSD10Y stands at a negative 0.3% so far in 2023, after a 17% slump in 2022 and a 3.9% drop in 2021, the bank’s strategists led by Michael Hartnett, pointed out in a note on Friday.

Here’s a visual on that:

That reflects a “staggering 40% jump in U.S. nominal GDP growth, which is growth plus inflation) since the COVID lows of 2020,” they said, providing the below chart.

Bond returns have suffered this year as the Federal Reserve has continued with its interest-rate hiking campaign aimed at getting inflation under control. The “big picture in the 2020s vs. the 2010s is lower stock and bond returns, which we would expect to continue given political, geopolitical, social & economic trends,” said Hartnett and the team.

This year has been better for stocks, but the bounce since the COVID pandemic has been very concentrated in U.S. stocks especially the technology sector, with breadth in global markets “breathtakingly bad,” the analysts said. Breadth refers to the number of stocks actively participating in a rally.

That breadth is the worst since 2003 for the MSCI ACWI, which captures large and mid-cap stock representation across 23 developed markets and 24 emerging ones.

As for the latest weekly flows into funds, Bank of America reported that $10.3 billion went to stocks, $6.5 billion to cash and $1.7 billion to bonds, with $300 million draining from gold GC00, -0.10%.

The yield on the 10-year Treasury was holding steady on Friday at 4.102% after data showed the U.S. economy generated more jobs in August, but the unemployment rate rose to 3.8% from 3.5%, and job gains revised down in July and June.

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