Bond return prospects bleaker than ever
Bonds are among the best performing asset classes of the past 40 years. But it’s not unlikely the next 40 years will show a radically different picture. 2021 and 2022 could even yield negative returns as above-average economic growth and rising inflation could push bond yields up from their record-low levels.
The table below shows that bonds have done great over the past four decades. However, returns have fallen steadily from 222.7% in the period 1980-1989, to 109.9% in 1990-1999, to 84.7% in 2000-2009 and to 44.5% in the ten years from 2010-2019.