Bad News for Trump. The US Is In Its Worst Bond Crisis Since Alexander Hamilton Was Leading the Treasury

TLT lost 34% and TLH lost 23% over five years during what BofA ranks as America's second-longest bond drawdown on record.

SHY gained nearly 10% over five years, proving short-duration bonds shielded investors while the 10-year yield surged past 5%.

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While stock traders have spent most of 2026 focused on the benchmark S&P 500, the bond side of the classic portfolio has been stuck in a historic slump. The 10-year Treasury yield stood at 5.19% on October 14, 2026, up 1.16 percentage points from a year earlier. BofA Global Research data, shared on X by Mike Zaccardi, CFA, ranks the current slide as the second-longest bond drawdown in US history. That record runs back to the federal debt Alexander Hamilton organized as the first Treasury secretary.

Mike Zaccardi, CFA (@MikeZaccardi), sharing BofA Global Research: "BofA: The 2nd longest bond drawdown in US history"

In more than two centuries of American borrowing, only one period has kept bondholders waiting longer. Hamilton's plan to have the new federal government take on the states' Revolutionary War debts created the Treasury market investors trade today. For retirees who count on bond funds to cushion their portfolios, this ranking hits the part of the plan that was supposed to be safe.

Inflation Refuses to Cool, and Bond Prices Keep Falling

Consumer prices rose 3.7% year over year in September 2026. The Federal Reserve had held the upper bound of its target range at 3.75% since December 2025, then raised it to 4.00% on September 17. That rise was a warning to anyone holding bonds bought earlier this decade, when yields sat near much lower levels.

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A bond pays a fixed coupon, so when new Treasuries pay more, older bonds have to drop in price until their yields match. The longer the maturity, the more years a holder is stuck with the lower coupon, so long bonds take the steepest price cuts. Over the past year, the 10-year yield rose from a low of 3.97% on February 27 to a high of 5.31% on October 5.