Why Treasuries Became Risky Again
Carolin Pflueger of the University of Chicago Harris School of Public Policy joins Joe Weisenthal and Tracy Alloway to examine why US Treasury bonds have become riskier and more stock-like. She breaks down how market-perceived monetary policy reaction functions evolve, why term premia surged after 2020, and the historical link between deep sovereign bond markets and geopolitical hegemony.
- University of Chicago economist Carolin Pflueger found that expected bond returns move directly with the correlation between stocks and bonds. Read →
- In May 2021, the US economy suffered an annualized inflation surprise of 6%, yet two-year Treasury yields did not move at all. Read →
- Alexander Hamilton stated in his 1790 report on public credit that reliable national debt is "the price of our liberty," linking sovereign borrowing directly to military survival. Read →
- Before 2000, US Treasury bonds moved in tandem with equities, acting as risky, stock-like assets during stagflationary shocks in the 1970s, 1980s, and 1990s. Read →