The Collapse of the ‘Risk-Free’ Delusion: Implications for the $133 Trillion Bond Market
The Collapse of the ‘Risk-Free’ Delusion: Implications for the $133 Trillion Bond Market
By Nick Giambruno
Did you know that 2022 was the WORST year for US Treasuries in American history?
The benchmark 10-year Treasury fell nearly 18%, and the 30-year Treasury collapsed over 39%. Many other bonds did even worse.
Even if you go back 250 years, you can’t find a worse year for Treasuries, the foundation of the colossal global bond market.
It should forever end the ridiculous—yet pervasive—delusion that Treasuries are “risk-free.”
Many people and almost every financial institution have long thoughtlessly accepted this trope. As a result, bonds in general—and Treasuries in particular—became the store-of-value asset of choice and the de facto savings account for savers and investors worldwide.
Today, the global bond market has grown to be worth more than an estimated $133 trillion as the masses parked their savings there because conventional wisdom said it was the “safe” thing to do.
By contrast, all the mined gold in the world is worth about $12.7 trillion, less than 10% of the bond market.
It may be tempting to think the worst is over for bonds—it’s not. As you’ll see, the pain for bondholders is just starting.
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