BofA: Worst Century-Long Returns on Long-Term Treasuries May Signal Generational Buying Opportunity
nashnova research
BofA strategist Michael Hartnett notes that 15-year-plus US Treasuries now show a 10-year rolling annualised return of -2% — the lowest in nearly a century — and argues that history's deepest return troughs have preceded generational buying opportunities.
How bad are long-bond returns, exactly?
US Treasuries with maturities above 15 years have delivered a 10-year rolling annualised return (the average yearly gain over the past decade) of -2% — the worst reading in nearly 100 years.
This means → investors who held long-duration bonds over the past decade lost roughly 2% a year on average — an outcome without precedent in a century of data.
Over the same window, US equities returned 15% annualised and commodities returned 11%, leaving long bonds far behind.
Why might "the worst" actually mark "the best entry point"?
Hartnett's core argument: deep troughs in 10-year rolling returns have historically preceded major market reversals.
In plain terms = once an asset class has been sold down to an extreme, the price already reflects the bad news — the next move is more likely up than further down.
Historical precedent: the S&P 500's generational buying opportunities in August 1939, September 1974, and February 2009 all followed long-term return troughs; commodities staged major rallies from similar lows in 1933, 2018, and 2020.
What does this imply for the current market landscape?
Equities and commodities both sit at elevated 10-year rolling returns, while long bonds sit at a historic low — an extreme divergence.
This means → if historical patterns repeat, capital may be approaching a multi-year inflection point — a rotation from stocks and commodities into fixed income.
This reflects Hartnett's cycle thesis: the current reading is not a signal that long bonds will keep deteriorating, but rather that fixed-income markets may be brewing a generational mean reversion.
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