Whoa...what happened? 2016 Q4 bond performance.

[PFG]

I chose the PP for many reasons, one of the top being my desire to set it, forget it, and rarely check it. I usually view my PP once each quarter. Today I peeked and...whoa! Holy moly bond slide. Q3 to Q4 loss in the $18K range. Without going into too much detail, can someone explain what happened here at the end of 2016 to the bond market?

I'm holding individual purchased 30 yr treasuries parked in an IRA and 401k. Not going to jump off any cliffs, would just like to know what occurred with TBonds.

[curlew]

Didn't you hear that Donald Trump is making America Great Again? The dollar and stock markets have reached all time highs since the election so happy times are here again. So no need for the safe harbors of gold, bonds, and cash any more.

But I think the simplest answer is that the FED has finally stated that interest rates are going to start rising. I think I read recently that they are predicting three increases next year.

[dualstow]

Yes, please don't jump off any cliffs.

Anybody out there correct me if I'm wrong, but what I *think* is going on is the anticipation of higher interest rates. It may only be 25 basis points here and there through 2017, but if ten-year notes start paying what 30-year-bonds pay, no one will want to hold 30-year bonds.

I've written this elsewhere, but I've seen my best bonds come down from 40% profit to under 23%, and my whole bond allocation's profit is down more than $11K.

I missed Janet Yellen's speech this afternoon. Was getting cat feeding instructions from a neighbor.

[sophie]

I'm guessing it's a combination of anticipated higher interest rates and Wall Street euphoria at Trump's election. Which is exactly the reverse of what was predicted to happen, but I guess that's a topic for another thread :-)

The last time the Fed raised rates, bond rates went up just like they are now, and the Fed was saying they would raise rates again later in the year. I was so certain that rates would go up again that I locked a mortgage rate too early on my apt purchase, and ended up over-running the lock period and paying a few hundred $$ in extension fees. Before the next meeting, the GDP numbers sputtered. The Fed changed its mind, and bond rates fell again. So you just never know.

[I Shrugged]

I just have to keep reminding myself that I only have 25% in bonds.

[ochotona]

Don't sell. They are going to pop back up eventually, they are way oversold short term. If you sell now, you sell at a bottom.

[barrett]

Don't sell. They are going to pop back up eventually, they are way oversold short term. If you sell now, you sell at a bottom.

Ocho, how do you know this? Are you yourself loading up on long bonds now?

[ochotona]

Don't sell. They are going to pop back up eventually, they are way oversold short term. If you sell now, you sell at a bottom.

Ocho, how do you know this? Are you yourself loading up on long bonds now?

Context - I mean they are short-term oversold. Long-term... no one knows. There will be a reversion to the shorter-term moving averages, it usually happens. Beyond that... stick to your strategy.

Personally, I only own very few long bonds in a small test portfolio. I combined 30% TLO and 70% SCHR to make a "synthetic" IEF 10-year, because I am too cheap to pay $8.95 to trade IEF at Schwab, SCHR and TLO trade for free. But I will rebalance eventually, and buy bonds.

[Kbg]

Historically LTTs are almost as volatile as stocks so a big move either way should not be surprising. If interest rates head back to the 5-6% range your LTTs are going to remind you of a stock bear market and you can expect them to get cut in half give or take.