From the Wall Street Journal, 5 Oct 2020, by Paul J. Davies:
“…The wave of central bank stimulus unleashed to combat the Covid-19 crisis has repressed government bond yields in the U.S. and elsewhere, and threatens to keep yields trapped at low levels for years to come. Even as stock markets have recovered since April, 10-year Treasury yields have barely budged.
The fear is that when stocks next take a tumble, bonds won’t cushion the fall. Investors have been left hunting for another simple way to balance risks.
It is rare for stocks and government bonds both to fall in value together, but that happened in March: A basic 60% stocks-40% Treasurys portfolio suffered one of the worst single-month losses since the 1960s, according to Goldman Sachs. The only worse returns occurred in 2009 and 1987.
March’s falling bond values “added insult to injury instead of helping to balance a multiasset portfolio,” said Stéphane Monier, chief investment officer at Lombard Odier in Switzerland. “This experience could repeat itself more often in future because we have reached an effective lower bound for government bond yields.”
…Mr. Monier of Lombard Odier has been looking for income in markets like Chinese government debt, where 5-year bonds pay about 3% versus the less than 0.3% available on 5-year Treasurys.
He also favors gold as a store of value. In a world where many bonds’ real yields are negative, the fact that you have to pay to store gold doesn’t matter like it used to, Mr. Monier said...