Bonds: Not A “Safe Haven” Yet

Globally, inflation is running near 3%. And 87% of the world’s fixed-rate bond investments yield less than 5%:

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Only 13% of global bonds offer returns north of 5%. (Source: Bloomberg)

That means bonds “real” annual return – net of inflation – is 2%. That’s before high transaction costs to buy and sell bonds or paying taxes on your bond income.

The return for investors, even for a safe-haven investment, is too low. Bonds will only assert their vestigial “safe-haven” status if there’s a stock market crash. (At that point, trust in everything else will have disappeared.)

For now, bonds offer downside protection with no upside.

Poor bond returns are also what has been blowing up the traditional 60/40 portfolio mix of stocks to bonds. Stocks for the past three years have been a better bet, even for the pile of cash you’re expecting to outpace inflation – the defining factor in our “terrifying bull market” thesis.

If Trump and Bessent get their way and the Fed pushes rates even lower this year – and we don’t enter into a sustained bear market in stocks – the pressure on Treasurys will be even greater.

~ Addison

P.S. Later today on Grey Swan Live, we turn to a corner of the capital markets usually reserved for well-connected investors: the pre-IPO space. Companies like SpaceX and Anduril have caught our attention as investments, but they’re not officially publicly traded.

Our friend Matt Milner over at Crowdability has created a way to get access to these companies before they go public – and at the valuations where institutional investors are able to invest today.

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So mark your calendar for 12 p.m., ET today!

Globally, inflation is running near 3%. And 87% of the world’s fixed-rate bond investments yield less than 5%:

Turn Your Images On

Only 13% of global bonds offer returns north of 5%. (Source: Bloomberg)

That means bonds “real” annual return – net of inflation – is 2%. That’s before high transaction costs to buy and sell bonds or paying taxes on your bond income.

For now, bonds offer downside protection with no upside.

If Trump and Bessent get their way and the Fed pushes rates even lower this year – and we don’t enter into a sustained bear market in stocks – the pressure on Treasurys will be even greater.

~ Addison

Our friend Matt Milner over at Crowdability has created a way to get access to these companies before they go public – and at the valuations where institutional investors are able to invest today.

Turn Your Images On

So mark your calendar for 12 p.m., ET today!

According to Global Markets Investor, U.S. dominance peaked in late 2024. The relative line has trended downward for fifteen months. Leadership has dispersed. Even though we’ve been writing about the alarming, historic, high concentration in the Mag 7 at the very top of the indexes, large amounts of capital moved before the financial media headlines caught up.

U.S. aircraft carriers and air defense systems continue arriving in the Gulf. Iran conducted drills that briefly disrupted traffic in the Strait of Hormuz and warned of retaliation for any strike.

It’s pretty clear from the leaderboard year-to-date that investors are moving their money out of AI stocks into real-world “stuff” – the energy and commodities, natural that are the building blocks of an economy.

The crash was a major structural shock that wiped out leveraged positions and forced necessary, but painful, deleveraging across the digital asset ecosystem.

Did irresponsible marketing campaigns by certain platforms contribute to the crash? Again, I believe yes. When you incentivize users to treat a tokenized hedge fund like a stablecoin and then allow unlimited leverage on top of that, risk is amplified.

As massive as the crash was, it may have been necessary medicine. Sometimes excess leverage needs to be flushed from the system before the next move higher can begin. I believe we’re in the last stages of that process.

U.S. aircraft carriers and air defense systems continue arriving in the Gulf. Iran conducted drills that briefly disrupted traffic in the Strait of Hormuz and warned of retaliation for any strike.

The crash was a major structural shock that wiped out leveraged positions and forced necessary, but painful, deleveraging across the digital asset ecosystem.