Why in the World Would You Own Bonds When…

Bridgewater

Ray Dalio

Article

1 Pages

Bridgewater Associates examines why ultra low bond yields, heavy debt issuance, and aggressive monetary stimulus may challenge bonds’ traditional role as a store of wealth. Dalio argues today’s setup resembles late stage debt cycles, with more than $75 trillion of US debt assets potentially creating difficult supply and demand dynamics.

Key Takeaways

Payback Periods Stretched: US bonds require roughly 42 years to repay principal nominally and more than 500 years after accounting for inflation
Debt Supply Looms: More than $75 trillion of US debt assets existed, including $16 trillion of Treasury bonds and notes and another $5 trillion of Treasury securities.
Global Allocations Shifting: Chinese bonds represented only about 6% of global portfolio allocations, while US bonds accounted for over one third of global holdings among major institutional investors.
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