Eugenio Catone @CatoneEugenio: "U.S. Treasury yields surged as..."

Italy

U.S. Treasury yields surged as mounting inflation fears prompted investors to dump government bonds, driving borrowing costs higher on the expectation that interest rates will stay elevated. The selloff pushed the 30-year yield to a 19-year high of 5.20%, while the benchmark 10-year yield jumped to 4.67%, threatening to raise consumer mortgage and corporate loan rates. Long-term bonds (TLT) have been performing poorly for years now, and rather than protecting the portfolio from stock market volatility, they seem to only have a negative impact. The problem is that in a high-inflation environment, stocks and bonds have a positive correlation, which makes bonds much less useful than they were in the recent past. In my view, the bond sell-off has the potential to last for quite some time, at least until inflation-related issues are resolved. And I doubt they will be resolved anytime soon with the Strait of Hormuz still closed. Personally, I believe that the only bonds that make sense right now are those with very short maturities or inflation-linked bonds. $TLT (iShares 20+ Year Treasury Bond ETF ) $10Y.MAY26 $IEF (iShares 7-10 Year Treasury Bond ETF) $TIP (iShares TIPS Bond ETF) $SHV (iShares 0-1 Year Treasury Bond)

Not investment advice. The author may have financial interests in the mentioned instruments.