U.S. Treasury bonds rallied in 2011, as a number of macroeconomic woes, including the European debt crisis, incited worries of a global market meltdown. Does that mean you should consider investing in them? Yes, U.S. Treasuries are appealing. A portfolio of U.S. Treasuries with an average maturity of 20 years rose 28% in 2011, even better than its 26% jump in 2008, when we were in the midst of a financial crisis. The government securities haven’t seen a better year since 1995, according to Morningstar.
That doesn’t mean U.S. Treasuries are a sure thing.
No investment is.
The U.S. Treasury rally could wind down at any moment. In order to match the 2011 price rally, the 10-year U.S. Treasury yield would have to drop to about 1.05%, far below its record low of 1.72% in September 2011.
