The Tell: U.S. Treasurys are seeing longer bear market than stocks did in the 2008 financial crisis or 2000 dotcom crash

by | Oct 10, 2023 | Stock Market

Longer-term U.S. Treasurys are experiencing a bear market longer than what stocks endured during the 2000-02 dot-com crash and the 2007-08 financial crisis, according to DataTrek Research.  It has been three years and two months, or 800 trading days, since the iShares 20+ Year Treasury Bond ETF
which invests in long-term Treasurys, reached an all-time high on Aug. 4, 2020. The fund has since fallen 50%, noted Jessica Rabe, co-founder at DataTrek.

A bear market is traditionally defined by an index falling by 20% or more from a recent high.  In comparison, the S&P 500
recorded a 49% loss over 637 trading days from its cycle peak on March 23, 2000, to its trough on Oct. 9, 2002, as the dot-com bubble burst. The large-cap U.S. equity gauge fell 57% over 355 trading days from its peak in 2007 in the aftermath of the global financial crisis.  


Long-term Treasury yields have surged lately, with the 30-year
and the 10-year Treasury rates last week hitting their highest levels since 2007, respectively, before pulling back. The yield on the 10-year Treasury retreated 15.6 basis points to 4.627% on Tuesday, and the 30-year Treasury fell 11.5 basis points to 4.826% on Tuesday. Read: Treasury-market selloff has become the worst bond bear market of all time, according to BofA Long-term Treasurys are likely to continue to struggle until the Federal Reserve makes a pivot from its monetary-policy tightening, Rabe wrote in a Tuesday note. “The upshot here is that lows in capital markets occur once there is a change in policy to address uncertainty about the given issue at hand,” wrote Rabe. U.S. stocks reached a bottom in October 2002 as Congress approved military action in Iraq, giving investors some geopolitical clarity, Rabe noted. Stocks hit their cycle low in March 2009, one month after the federal government enacted the post–financial-crisis American Recovery and Reinvestment Act.  Stocks rose on Tuesday, with the Dow Jones Industrial Average
up 0.6% and the S&P 500 up 0.8%. The Nasdaq Composite
had gained 0.8%, according to FactSet data.

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