Wharton’s Jeremy Siegel declares end to the 40-year bull market in bonds

Finance

‘I see rates rising continuously’

“Forty years of a bull market in bonds. It’s really hard to turn your head around, and say could this be a turning point? But I think history will say yes,” said Siegel. “I see rates rising continuously over the next several years.”

Coronavirus risks sparked a flight to safety into bonds this year. Paired with massive fiscal and monetary stimulus, Treasury yields fell to record lows.

“They’re [bond holders] are going to be paying for the battle against coronavirus in terms of diminishment of their purchasing power,” he said, alluding to an inflation comeback that he believes will start in 2021.

Siegel, the long-time stock market bull who led 2016’s Dow 20,000 rally cry, took a step back from his optimistic forecast last winter and warned investors the coronavirus would cause havoc.

Now, it’s the bond market grabbing his attention.

“It’s been a long, 40-year bull market in bonds,” Siegel said. “It peaked in 1981 with the 10-year [yield] at 16%. I think we will look back at this as the end of the bull market in bonds.”

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