Since 1981, Treasury yields have pretty much gone in just one direction: down.
The result has been one of the most awe-inspiring bull markets in the modern era — one spanning more than three decades.
But the party may be over for Treasury bulls, who profit from lower yields because of the inverse relationship they have with bond prices. This can be seen in the 10-year Treasury yield, which bounced off a record low in 2016 and has recently shown signs of a sustained move higher.
Macquarie, for one, thinks the bond market’s stretch of strength is in its final innings. The firm forecasts the 10-year yield — currently trading just above 3%— will approach 4% over the next 18 months.
Many Wall Street experts have highlighted such an increase as problematic to the continued health of the stock market, which is locked in a historically long bull market of its own.