Sage Advice Quarterly Market Review 3Q2003

These are not happy days in bond land. Long-term interest rates have taken it on the chin over the past few months, and bond investors are feeling the sting. Indeed, with the 10-year Treasury yield spiking up to 4.40% from 3.11% on June 13, bondholders are suffering through the worst bear market in nearly two decades. What’s more, their experience marks a stunning reversal from the past three years, during which bonds have generally outperformed stocks by a wide margin. Since early March, stock prices are up by an eye-opening 25%, propelled by expectations of better earnings, stronger growth and a broader participation in the growth process wherein businesses belatedly join consumers in fueling the economy’s engine.