For much of the past half century, US Treasuries have handily outpaced gold as a buy-and-hold investment. Now, bonds’ status as the ultimate haven is facing one of its biggest challenges yet.
To Kristina Hooper, chief global market strategist at Invesco, the divergence of the two traditional havens signals investors’ heightened angst about skyrocketing government debt and their preference for physical assets. In many ways, bonds’ recent struggles are easy to understand. They stem largely from the Federal Reserve’s aggressive monetary tightening campaign since 2022, which drove up yields from a record low and hammered bond prices.
At the same time, deep-seated concerns around mounting US debt and deficits have raised broader credit worries. The growth of US public debt has accelerated since the pandemic and almost doubled over the past decade to about $35 trillion.