Exactly 35 years ago tonight this fund marked its all time low at $8.34 when stocks crashed 20% in one day, October 19, 1987.
It happened because it was a flight to safety, the US long bond being the safest haven in the world. Prices move inverse to yields. The price crashed because everyone plowed into it, and the yield soared to 10.25% as a result. As such, the all time price low is meaningless for bonds, but full of meaning for stocks.
At $8.49 tonight, however, the price is just $.15 higher than it was 35 years ago, but for an entirely different reason.
In 1987 the price crashed due to stock market fear; in 2022 it's due to bond market loathing, in particular, loathing of existing US debt which pays too little for the risk being taken. At 4.15% tonight, yield on the long bond has a long way to go to credibility. More importantly, the market is SHOUTING that trillions of dollars of existing US debt pays its holders a reprehensible sum.
People should think hard about what that means.
Faith in America hangs in the balance and is found wanting.
