The global economy is “in the early stages of the recovery of the equity culture and perhaps the end of a 30-year growing love affair” with bonds, Jim O’Neill, former chairman of Goldman Sachs Asset Management, said. “When the game starts to change with central banks, it is inevitable bonds are going to suffer.”
Some analysts are anticipating a surge into equities after the short-term volatility associated with the Fed tapering.
“We still haven’t seen the real rush to equities,” Lazlo Birinyi, president of Birinyi Associates Inc., said. “We’re still confident this market has a long ways to go.”
The iShares Barclays 7-10 Year Treasury Bond Fund (NYSEArca: IEF) lost 4.6% over the past month and the iShares Barclays 20+ Year Treasury Bond Fund (NYSEArca: TLT) declined 7.8%. Meanwhile, the SPDR S&P 500 ETF (NYSEArca: SPY) fell 4.3% over the last month and the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) dropped 3.6%.
For more information on the fixed-income market, visit our bonds ETFs category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own TLT and SPY.