Long Term

Bond Yields

Out Competing Stocks?

The 30-year Treasury yield is now yielding 4.90%. Its been within spitting distance of 5% since mid-March.

Treasury yields are still relatively low in a historical context. It’s just the years of QE and interest-rate repression by the Fed have distorted everything. And now there’s inflation, quite a bit of it, well above the Fed’s target, and once again accelerating. So for the Fed buying long-term Treasury securities to push down long-term yields is off the table.

DYI:  Treasury borrowings as far as the eye can see all fueled by Congress and Presidents (no matter the political party) nonstop spending.  That’s the real core driver of inflation forcing the Federal Reserve to monetize an ever growing portion of debt not covered by taxation.  High oil prices (supply and demand imbalance) just simply acerbates the increased cost of living, acting as a tax upon the American public. 

As we go through growth and recessions expect higher highs for all types of debt – public or private – during growing economic times and most importantly higher lows during recessions.  Until Congress and President(s) find the new found religion and put action into reducing budget deficits’ we’ll continue to endure higher interest rates similar to the Great Bond Bear Market of 1946 to 1981.

Higher long term rates have already begun their pushing down of PE multiples as measured by the S&P 500 index.  The Shiller PE maxed out in January of 2026 at 40.58 and now has begun its roller coaster downward journey. 

Simply put long term bonds and especially long term investment grade corporate bonds due to their decline (higher yield) are becoming more attractive than stocks. 

Vanguard’s Long-Term Corporate Bond ETF (symbol VCLT) current yield (as of 4-23-2026) is 5.79% as compared to the S&P 500 index (symbol VOO) yield at 1.16%!  Broader the spread between yields, the more tempting for long term investors (institutional or individuals) to begin shifting a portion of their new dollars into Lt. Term Corporates.

DYI