USA Bonds Crisis - Joe Blogs

[progree]

1. On top of bonds sucking recently and over the last several years, for example

Last edited Sat May 17, 2025, 08:51 PM - Edit history (1)

as of April 11:
Vanguard Intermediate Term Treasury fund (VFIUX) total return only 1.40%/yr since 1/2015
Year by year total returns with negative numbers in parentheses:
2015 1.61%
2016 1.29%
2017 1.67%
2018 1.10%
2019 6.39%
2020 8.31%
2021 (2.19%)
2022 (10.34%)
2023 4.18%
2024 1.48%
YTD 2.10%

and its purchasing power has decreased a cumulative 15.2% when inflation is taken into account.
Details: https://www.democraticunderground.com/111698737#post5

I have more on bonds at https://www.democraticunderground.com/111698737#post4

Edited to add:
Full disclosure: As financial advisors recommend for someone my age (over 70), I allocate 50% to fixed income investments and 50% to equities (actually most recommend even a higher fixed income to equities ratio for someone my age, so at50-50 I have an "aggressive" allocation). Most of my fixed income stuff is intermediate term bond funds, mostly corporate bonds. The other major part of my fixed income stuff is money market funds at Vanguard, Fidelity, and Schwab.

Disclosure: I'm not panicking on the news about Moody's ratings cut, given that the two other major ratings agencies have long ago made similar rating cuts. I just don't expect much of an impact from the Moodys news.

I should also mention that the bond performances (total returns) were hurt by the low yield era up to 2021 followed by a big rise in yields since the beginning of 2021 (rising yields cause existing bond values to drop). Existing bonds will do very well (values will go up) when inflation and longer-term inflation expectations eventually come down, though that could be years from now (or rather quickly if we have a recession).