Generally, recessions are bullish for bonds. Which makes this 3.8% bond yield a “best recession bet.”
Why are we talking bonds in a year where they have all been crushed? Well, that’s the reason. The cure for poor bond performance is the high yields that are now staring us in the face. We look forward, not backward.
Why are recessions good entry points for safe bonds? When the economy slows, rates fall. Bond prices move opposite to rates, so declining rates bring tidy profits.
This hasn’t happened yet. But history tells us it should happen soon.
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