Bonds Continue To Offer A Haven Amid High Macro Uncertainty
President Trump’s latest announcement on tariffs is a reminder that macro uncertainty is high and will probably remain so for the near term. “What we’re going to be doing is a 25% tariff on all cars not made in the US,” he said on Wednesday. It wasn’t exactly a surprise, given the President’s preference for tariffs, but it’s another wake-up call that the White House intends to pursue its policies, which suggests a rough ride for making assumptions based on the standard playbook for the economy and financial markets.
One exception is the case for holding bonds, which are often the go-to asset when the outlook turns challenging. Fixed-income securities overall are posting across-the-board gains this year, based on a set of ETFs through Wednesday’s close (Mar. 26).
The performance leaders in 2025 are 10-20-year Treasuries (TLH) and inflation-indexed government bonds (TIP), each posting 3%-plus year-to-date advances. Those are welcome gains when the stock market (SPY) is nursing a 2.7% loss so far in 2025. The gains for TLH and TIP are also sizable return premiums over the benchmark for US investment-grade bonds via Vanguard Total Bond (BND), which is up 2.1%.
