The Bull Market You Haven’t Seen

The way Douglas Peebles talks about the $100 trillion global bond market, you’d never guess that bond investors have been on a winning streak. “The market in most countries is completely dysfunctional,” says Peebles, chief investment officer of fixed income at AllianceBernstein.

If Peebles sounds anxious, it’s because this market has brought him and his peers into uncharted territory. As markets digested the news that Britain had voted to leave the European Union, the yield on Treasury bonds maturing in 10 years touched 1.32 percent on July 6, the lowest rate on record going back to 1792, before climbing back up to a still-low 1.5 percent. Confusingly for the uninitiated, falling yields mean that bonds are fetching higher prices on the market. So the “Record Low Rates” headlines obscure what’s been a strong bull run: The 10-year Treasury has jumped almost 7 percent in price so far this year—not bad for a traditionally conservative investment—and the 30-year bond surged 17 percent. In total, U.S. government debt has delivered a $660 billion windfall to investors in 2016.