The Gems Hiding in Plain Sight in the Treasury Market (2024)

You didn’t have to be a financial wizard to get a safe return of more than 7 percent on your money for decades to come. All you had to do was buy a 30-year U.S. Treasury bond in the last nine months of 1994.

And if you were especially lucky with your timing and bought that bond in early November 1994, you could have gotten more than 8 percent interest annually.

There were treasures elsewhere in the investment-grade bond market. Tax-free municipal bonds were paying more than 6 percent, and corporate bonds carried rates that were even higher.

Those kinds of gems aren’t available now. While interest rates have risen appreciably, I’m not confident that we are experiencing a 30-year peak with bargains galore, as the fortunate bond buyers of 1994 did.

But I do see parallels. After months of horrendous losses, long-term buy-and-hold bond investors can expect relief from disappointing returns in the years ahead.

What’s more, with short-term Treasury rates well above 5 percent, 10-year Treasury bonds sporting yields in the 4.9 percent range and investment-grade corporate bonds above 6 percent, fixed-income investments are attractive — certainly in comparison with the ultralow rates of a few years ago.