The 20 year treasury yield is about to hit 5%, which is an excellent “risk free” return. However, this means bond prices continue to decline. With such volatility, it becomes hard to endorse purchasing treasuries right now unless one plans to hold to maturity. Price movements like this suggest buyers believe yields will continue to increase. Which means they believe inflation is going to become a long term problem. This is dangerous for stocks.
What is the right play with bonds right now? My friends in r/LETFs have had their TMF heavy portfolios absolutely wrecked. Relative to stocks, 5% is starting to look downright attractive. Stocks are at near all time highs, and PE ratios are crazy. Nvidia is around 240x earnings. That’s 240 years to repay one’s investment. Is it the right time to check out of stocks and leg into various term treasuries?
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