VGLT - An Update On The Bond Bull Market

• Long-term bonds have been a powerful addition to any portfolio over the last few decades. Over the multi-year view, that will remain the case.
• Long-term bonds perform poorly when nominal GDP growth is increasing or is expected to increase. This is because the long-term Treasury rate will move with the long-term fluctuations in nominal GDP growth.
• High levels of government involvement in the economy, mainly in the form of transfer payments, will reduce long-term growth.
• Weaker levels of long-term growth will create excess capacity and a continuation of the persistent disinflationary trend. In the short term, however, the cyclical upturn in growth is still ongoing.
• I will wait for the leading indicators of growth and inflation to start a new downturn before adding an overweight position in LT bonds.

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