Ben Carlson, Columnist

History Is No Help When Handicapping the Bond Market

There's really only been three cycles over the past 90 years or so and each has lasted many decades.

March 23, 2017 at 1:00 PM UTC

Ben Carlson is director of institutional asset management at Ritholtz Wealth Management. He is the author of "Organizational Alpha: How to Add Value in Institutional Asset Management."

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Markets are never perfect in their predictive abilities but they tend to be forward-looking in how they trade to anticipate what will happen next. Take last week's interest-rate increase by the Federal Reserve, its third since December 2015, and the bond market.

Bond yields have been rising for some time. In what some investors are calling a generational bottom in rates, the yield on the benchmark 10-year Treasury note went as low as 1.36 percent in July 2016. It is currently at about 2.41 percent. Two-year yields have more than doubled and are now almost equal to the lows in the 10-year yield from this past summer. The Fed isn't the only reason, as investors are also weighing higher inflation expectations, economic growth estimates and bond market dynamics when considering the outlook for fixed-income assets.