US Treasuries Post Worst Real Returns Since 1980s, Structural Bear Market
Over the past decade, US Treasuries have delivered an average annual inflation-adjusted return of -3%, the worst since the 1980s, while the S&P 500 returned +12%. The gap between stocks and bonds is the widest since the 1960s.
According to a recent analysis, US Treasuries are in a structural bear market. Over the last 10 years, inflation-adjusted returns on Treasuries have averaged -3% annually—the worst performance since the 1980s. In contrast, the S&P 500's average annual real return over the same period was +12%.
This marks the widest return gap between equities and fixed income since the 1960s, when the S&P 500 peaked at +19% annual real returns while Treasuries managed only +1%. Sustained periods of negative real Treasury returns have occurred only three times in market history: the 1910s, the 1940s, and the 1970s–1980s. Each episode coincided with high inflation, with rates sometimes exceeding 10% annually.
The note highlights that deficit spending and rising inflationary pressures remain out of control, echoing past periods of severe economic strain.
Source: The Kobeissi Letter