Treasurys are poised to eke out only a minuscule return in 2024, disappointing bond traders who once anticipated a banner year as the Federal Reserve started pulling interest rates down from a more than two-decade high.
But instead of dropping, benchmark 10-year Treasury yields jumped 69 basis points this year to 4.56% — pushing down bond prices — as the strength of the economy drove the Fed to move at a more gradual-than-expected pace.
It marks the fourth straight year of rising yields, the longest such stretch since 1981.
The overall price drop was offset by interest payments, allowing a broad gauge of the Treasury market to post a gain of about 0.7% this year through Dec. 30, significantly less than the 5.3% return from short-term Treasury bills.
It represents the fourth year that bonds underperformed T-bills, which hasn’t happened since at least 1992, according to data compiled by Bloomberg.
The poor performance is the result of a resilient economy that forced investors to abandon the aggressive bets on monetary easing they were making when the year began.
The rise in the long-term bond yields also underscores concern that President-elect Donald Trump’s policies may fuel inflation and widen deficits by pouring more stimulus on the economy.
