"The WSJ reports on the Treasury Rally that Won't Die:
According to investment-research firm Morningstar, a portfolio of U.S. Treasurys with an average maturity of 20 years—the quintessential safe haven—rose 28% last year, even better than its 26% jump in 2008. You would have to go back to 1995 to find a better year.
More confusing still: Last year's surge came in the 30th year of a historic rally. Since 1981, long-term Treasury bonds have returned 11.03% annually, 0.05 percentage point better than the Standard & Poor's 500-stock index.
This comes a full year and a half after the WSJ said Treasuries weren't only overpriced, but that we were experiencing The Great American Bond Bubble (my rebuttal 'Bond Bubble Blasphemy' is here, while my rationale for the value of Treasuries at the time can be found here).
One of the charts outlined in my post back then (and updated below, but brought back to 1941 using data from Shiller) shows the takeaway... treasury rates have been a reflection of the historical growth of nominal GDP going back 50 years. Before that there was a huge disconnect following the Great Depression (when nominal GDP dropped by ~50% between 1929 and 1934... yes 50%!) and World War II, which conveniently allowed the U.S. to grow out of the massive amount of debt the nation had accumulated..."
