Treasuries Are a Whisker Away From Erasing This Year’s Loss

US Treasuries are on the brink of breaking even during a roller-coaster first half of the year.

A Bloomberg gauge of returns in the world’s biggest bond market was down just 0.1% in 2024 through Tuesday after having lost as much as 3.4% for the year in April. The loss may endure for at least another day, however. Yields climbed as US markets reopened after a holiday despite weaker-than-anticipated housing starts data for May.

At the heart of the market’s recovery from the April nadir are investor bets that cooling US prices will convince the Federal Reserve to cut interest rates sooner and by more than officials have signaled, effectively putting a lid on how high Treasury yields can climb.

“We’ve seen the peak in yields,” said Stephen Miller, four-decade market veteran and investment strategist at GSFM in Sydney. “Bonds are now back as having a deserved place in a multi-asset portfolio.”

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