Question of the Day: Is the Bond Bull Market Over?

Amidst talk of red lines, trends lines, and common sense lines, the debate lingers: Is the bond bull market over or not?

Bull and Bear Markets

Consider this chart or 10-Year treasuries, courtesy of Jim Bianco at Bianco Research.

I asked Bianco for the above long-term chart. Thanks Jim!

The notes in blue and the arrows are mine. The arrows may seem obvious, now that I drew them, but they would likely have seem obvious had I drawn them differently.

Secular Bull and Bear Treasury Markets

What's the Definition?

There is no generally agreed upon definition of a Treasury bear market.

Those who suggest a a 35-year bull market is long in the tooth, just might wish to ponder the 100-year secular bull market shown above.

In equities, a 20% decline constitutes a bear market. With Treasuries, 20% moves are ordinary. In the above chart I defined a bear market in bonds as a 100% rise in yield and a bull market as a 50% decline in yield.

With that definition we had a 100-year secular bond bull market from about 1838 to 1938 (a bit longer actually).

Like My Definition?

Hopefully, that chart makes a lot of sense at first and even second glance, but please consider zero bound effects.

Zero Bound Effects Since 2012

Since 2012, the yield on the 10-year Treasury note has doubled or halved three times. That is what happens as yields approach zero.

Japan provides a stunning example.

Zero Bound Absurdities

Bear Market Definition Refinement

To accommodate zero bound impacts, we need a ceiling breakout.

  • For the US, I propose a bear market is a 100% rise in yield provided the yield tops 4%.
  • For Japan, I propose a bear market is a 100% rise in yield provided the yield tops 2%.

Question of the Day

Is the bond bull over?

You tell me, but first provide a definition that makes sense mathematically, and chart-wise.

People have made fools of themselves countless times regarding both the US and Japan.

For 20 years, the long-term yield in Japan was below 2%.

My take?

I do not know if the bond bull is over, nor does anyone else.

My strong belief is the US will enter a recession and yields will tumble. I've been known to be wrong (and right) before.

Powell Promises Patience

Fed Chairman Jerome Powell promises patience: I say So What? It Doesn't Matter

Similarly, economist David Rosenberg says Recession Odds North of 80%.

Given the US has $22 trillion in debt and deficits as far as the eye can see, I have doubts about whether or not the low in yields is in. Yet, we could have a 100-year bull market. It's happened before.

People pretend they know things are are truly unknowable.

Mike "Mish" Shedlock

Comments (8)
No. 1-8

if the u..s goes into recession credit spreads should rise which is a negative for spread products(corporate debt etc). 10 year really hasn't gone up. it doesn't seem to be responding one way or another to fed moves(which makes some sense considering the fed really only influences the short end of the curve).

But absent inflation or a currency crisis in the u.s. i don't see what makes ten year yields spike


"Yet, we could have a 100-year bull market. It's happened before."

It seems as if we have run out of room to have a 100 year bond bull market.


Yes, the past five years have been full of lucrative trading opportunities for me as a Zero-Coupon US Treasury investor.

I believe the Treasury bull market has one "Last Hurrah" mega-rally left in it before it finally succumbs to the inevitable mathematics of multi-trillion $ annual deficits and an unmanageable National Debt.


It happened before when we were on a Gold Standard for virtually the entire time. This makes a HUGE difference.


What is it the MMT Fed shouldn't like about a 3% 10 year? This from 2010,,,,,