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Long-term govt bonds see big returns

New York

FOR all the talk that US Treasuries will tumble once the Federal Reserve starts to raise interest rates, investors in the longest-dated debt securities are finding little cause for concern.

Government bonds due in 30 years, the most vulnerable to losses when growth picks up and inflation accelerates, have returned more than 20 per cent this year versus 2.9 per cent for five-year Treasuries. That's reduced the yield premium that investors demand to hold the 30-year securities to 1.46 percentage points, close to the lowest since 2009.

Even as the US economy shows signs of gaining momentum, buyers are pouring into long bonds because the collapse of inflation expectations suggests long-term...

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