Despite all the consternation and hoopla surrounding the stock market, AI disruption, and all the rest, one asset class actually had a pretty good month: bonds. U.S. Treasury bonds, in particular, did well in February.
As our Chart of the Week shows, the Bloomberg US Treasury index gained about 1.5% over the past month. That may not sound dramatic, but it mattered for investors holding a diversified portfolio. With the U.S. stock market down more than 1.2% over the same period, an investor holding a standard 70/30 portfolio, with 70% in stocks and just a 30% allocation to long-dated U.S. Treasuries, would have still finished the month in positive territory.
Why did bonds do so well last month? Well, it appears investors again view Treasuries as the premier asset to hold during turbulent markets. As a result, they’re buying U.S. bonds in droves, which helped push the benchmark 10-year yield below 4% last Friday for the first time in many months.
Go further out on the yield curve, to maturities beyond 20 years, and returns were as high as 4%. That’s good news for non-investors, too, because it means long-dated interest rates are falling. Case in point, the 30-year mortgage rate dipped below 6% last week for the first time since 2022.
All in all, it’s a good reminder that U.S. Treasuries remain the go-to haven trade and can still provide a meaningful cushion in investors’ portfolios when financial markets get testy.
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.
Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Past performance does not guarantee future results.
The Bloomberg US Treasury Index measures US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury.