Today’s Chart of the Day from Bank of America shows that the increase in the 10-year treasury interest rates in 2022 caused the worst price decline since 1788.Normally, price declines can be somewhat offset by the yearly interest payments, but in this case, the interest payments were so low, that they are providing little to no support. This phenomenon is called having a high convexity which is plaguing bonds that were issued when the rates were at historic lows. The chart title shows that we have never, in the history of the U.S., seen bonds decline for three years in a row, and there is a better than average chance they will not, but past performance is no guarantee of future returns.
Samuel serves as Senior Vice President, Chief Investment Officer for the Crews family of banks. He manages the individual investment holdings of his clients, including individuals, families, foundations, and institutions throughout the State of Florida. Samuel has been involved in banking since 1996 and has more than 20 years experience working in wealth management.
Investments are not a deposit or other obligation of, or guaranteed by, the bank, are not FDIC insured, not insured by any federal government agency, and are subject to investment risks, including possible loss of principal.