Treasury bonds have soared so far this year, with long-term issues providing investors a total return of more than 15 percent, according to Barclays data.
But so far this month, the picture hasn’t been as bright. Long-term bond prices have slipped, while stock prices have risen.
And with yields near historic lows, some experts say Treasuries have no place to go but down.
"In order to embrace buying Treasuries now, you have to believe inflation is permanently impaired and growth will be dismal for an extended period," Tad Rivelle, chief investment officer of fixed income at TCW, told The Wall Street Journal.
"Knock the underpinning from either, and it's hard to justify Treasuries at these levels."
This wouldn’t be the first time Treasuries plunged. They also did so in 2003, 1993 and during the period of 1977-82.
Investors could lose 7 percent on 10-year Treasuries and 10 percent on 30-year Treasuries, William Larkin, portfolio manager for fixed income at Cabot Money Management, told The Journal.
"If (economic) data keep coming in positive, that would be reasonable in the next six months," Mr. Larkin says. "People forget that we weren't there that long ago."
Not everyone is so negative on Treasuries.
“When you have in the background, the Fed buying Treasuries and the possibility of further quantitative easing down the road, it ensures that rates will stay at very low levels,” Larry Milstein, managing director of government debt at RW Pressprich, told Bloomberg.
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