People that bought long-dated treasuries, those betting on deflation, in the first quarter of 2009, lost BIG this year.
Long-term Treasury bonds are on track for their worst year in at least three decades. The Barclays 20-plus-year Treasury index has posted a total return of -20% in 2009.
The U.S. household sector bought a net $178 billion of Treasury securities other than savings bonds during the acute phase of the crisis, between last October and this past March, according to Federal Reserve data.
Households and nonprofit organizations were actually net sellers during the fourth quarter of 2008, when Treasury prices were soaring as financial institutions around the globe scooped up safe U.S. government obligations.
The household sector then bought $324 billion worth of Treasurys in the first quarter, as prices at the long end of the yield curve started into a yearlong slide.
Maybe its not such a good idea to hold long-dated debt of a country that is having trillion-dollar deficits. How long with China put up with losses like this?