Are people just retarded M&th&rf vckers? How in the f vk are long term treasuries losing money? There not f vcking going anywhere for God's f vcking sake....
You’re not taking into account all the factors that explain why a bond does what it does.
It’s offered initially at par value, or $1,000 per bond. It matures at a set date in the future, also at par value. If the issuer doesn’t default, you get your $1,000 back plus the interest, called the coupon, that it paid from start to finish.
It’s what happens between issuance and maturity that confuses people. A bond’s price can go up or down depending on changes to interest rates, the economy and the underlying health of the issuer.
Think of it as like buying a rental property.
Properties A and B are both going to pay out 10,000 in gross rent over the next 12 months. Property A costs $100,000 and Property B costs $150,000.
The gross payout, or yield, on A is 10%. The yield on B is 6.66% because it cost more to buy the same income stream.
It’s all about how much the desired income stream costs. In times of distress, higher quality income commands a higher price, and vice versa. When the economic outlook shows signs of improvement, that safe money starts rotating toward riskier corporate bonds in search of more yield. Stocks follow.
Rinse and repeat.