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SERIOUS MONEY:Market turbulence and economic weakness has increased the appeal of Treasury bonds, writes Charlie Fell

THE SECULAR bear market in US Treasury bonds that began in the summer of 1982 continues to march on with the yield on the 10-year declining from almost 15 per cent 26 years ago to less than 3 per cent today. While stock prices have dropped by 45 per cent in the year to date, Treasuries have generated returns of more than 9 per cent as investors have sought out the safety of default-free bonds. The massive divergence in the performance of the two asset classes has erased years of superior stock market returns such that Treasuries have now outpaced equities over the past two decades. Investors need to know whether the great bond bull market will continue and what the Treasury outlook means for stocks.