Place a Bet Against Uncle Sam

If you think easy money and staggering deficits will lead to inflation, consider investing in an inverse bond fund.

Bond investors are finally coming to their senses. How else to explain the recent run-up in Treasury-bond yields? Since the yield on the ten-year Treasury note bottomed at a record low 2.04% on December 18, it has rebounded to 2.80%. The yield on the 30-year T-bond, which also bottomed on December 18, at 2.54%, closed January 29 at 3.56%.

Because bond prices move inversely with yields, the recent moves are bad news for holders of Treasury bonds and funds that that invest in Treasuries. For example, between December 18 and January 29, the share price of Vanguard Long-Term U.S. Treasury (symbol VUSUX) declined by nearly 9%.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%
https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

To continue reading this article
please register for free

This is different from signing in to your print subscription


Why am I seeing this? Find out more here

Manuel Schiffres
Executive Editor, Kiplinger's Personal Finance