Treasury Bonds: The Quiet Comeback of a Forgotten Asset

Treasury bonds—once the bedrock of safe investing—have spent years in the shadows, overlooked by a generation chasing stock market highs and crypto thrills. But as we hit March 2025, with stocks wobbling and uncertainty thick, these government-backed securities might be ready for a revival. Known as T-bonds, they’re a promise from Uncle Sam: lend us money, and we’ll pay you back with interest, no questions asked. This article digs into what Treasury bonds are, how you can invest in them, how they tick, why they fell out of favor—especially with younger folks—and why they could shine again as markets turn south. Plus, we’ll tackle the risks, like U.S. foreign policy moves that could shake global trust. In a shaky world, T-bonds might just be the steady hand investors need.

What Are Treasury Bonds? The Basics

Treasury bonds are long-term debt securities issued by the U.S. Treasury Department to fund government spending. With maturities of 20 or 30 years, they’re the longest-dated of the Treasury family—bills (up to 1 year), notes (2-10 years), and bonds. You buy a T-bond at a set price, say $1,000, and the government pays you a fixed interest rate—called a coupon—every six months until it matures. At the end, you get your $1,000 back, guaranteed by the “full faith and credit” of the U.S. government. As of March 2025, a 30-year T-bond yields around 4.5%, per TreasuryDirect data.

They’re sold at monthly auctions via TreasuryDirect.gov, starting at $100 minimum, or traded in the secondary market through brokers. That guarantee makes them the gold standard for safety—default’s off the table unless the U.S. collapses entirely. But safety comes with a catch: yields are lower than riskier bets like stocks or corporate bonds. Still, for stability, they’re tough to beat.

How to Invest in Treasury Bonds

Getting into T-bonds is straightforward. Here’s how:

• Direct Purchase: Head to TreasuryDirect.gov, set up an account, and bid at auctions. Non-competitive bids (accepting the set yield) cap at $10 million per auction—plenty for most. You’ll need a linked bank account for payments.
• Secondary Market: Buy existing T-bonds through a broker like Fidelity or Schwab. Prices fluctuate here—say, $950 for a $1,000 bond if yields rise—so you might snag a deal or pay a premium.
• Funds: For diversification, grab an ETF like the iShares 20+ Year Treasury Bond ETF (TLT) or a mutual fund. No maturity date, but you get broad exposure with less hassle.

Hold to maturity for the full payout, or sell early if rates shift. Interest is federal-taxable but skips state and local taxes—a perk in high-tax states. In 2025, with cash earning 4% in savings accounts, T-bonds’ 4.5% over 30 years offers a longer-term lock with less risk than stocks. Check out following chart with interpretation below:

Chart above: TLT (Ishares 20+ Year Treasury Bond ETF) since 2004. They reached their highs during the Covid-19 in March 2020. The following money printing and enourmous rally in risk assets, brought them out of favour. In October 2023, they reached their low (grey bottom line), this low matched precisely with the '04, '05 and '07 lows, historically always spiking from here. Also this time, we saw a strong rally, followed by a retrace which formed a higher low (signal that a trend is changing). There is potential in the bond price. Adding the yield you get during the time of holding, this might be an interesting opportunity in times of uncertainties.

How Treasury Bonds Work

T-bonds are simple machines. Buy a $1,000 bond with a 4% coupon, and you get $20 every six months—$40 yearly—for 20 or 30 years, then your $1,000 back. Yields are set at auction based on demand; if investors bid high, yields drop, and vice versa. In the secondary market, prices move opposite to yields: if new T-bonds yield 5%, your 4% bond’s price falls—maybe to $900—to match that return for new buyers.

This inverse dance with interest rates is key. Rates rise, prices drop; rates fall, prices climb. In 2022, when the Fed hiked rates from 0% to 4.5%, T-bond prices tanked—10-year yields hit 4.2%—but holders to maturity still got their principal. It’s a predictable income stream, unlike stocks’ wild swings, making T-bonds a portfolio anchor when chaos hits.

Out of Favor: Why the Young Skipped T-Bonds

For years, T-bonds were persona non grata, especially with younger investors—Millennials and Gen Z. From 2009 to 2021, the S&P 500 roared 400%, while 30-year T-bond yields hovered below 3%, often under inflation. Why park money in a 2% bond when Tesla’s up 1,000%? Low rates post-2008 made growth stocks the darlings—tech, crypto, anything with a story—while T-bonds felt like a relic.

The balanced portfolio—say, 60% stocks, 40% bonds—lost its shine. Younger folks, raised on Robinhood and X hype, saw bonds as “boomer stuff.” A 2023 Fidelity survey pegged Millennial bond ownership at 15%, versus 40% for Boomers. Risk tolerance was higher, time horizons longer—why settle for 2% when you’ve got decades to ride out stock dips? Plus, near-zero yields barely beat cash—1% in 2019 versus 1.5% in a high-yield savings account. T-bonds got sidelined.

The Comeback: Why T-Bonds Could Shine in 2025

Fast forward to March 2025: the S&P 500’s down 8% from January highs, tech’s shaky, and recession whispers are loud. T-bonds might be back in play. Here’s why:

• Stock Market Wobble: The S&P’s 2024 rally—up 20%—hit a wall. Higher rates (4% Fed funds) and slowing GDP (1.5%, per IMF) signal trouble. T-bonds’ 4.5% yield looks tasty when stocks could drop 20%—a 2022 repeat, when T-bonds cushioned diversified portfolios.
• Rate Shift: Post-2022 hikes, yields are competitive—4.5% beats 2% inflation-adjusted returns from 2010s T-bonds. Investors fleeing stocks want safety; T-bonds deliver.
• Flight to Safety: Geopolitical mess—Ukraine, Middle East—plus U.S. debt ceiling talks spook markets. In 2020’s crash, T-bond prices jumped as stocks fell 34%. History says they’re a haven when equities tank.
• Portfolio Balance: Younger investors, burned by 2022’s 25% S&P drop, might rethink the 60/40 mix. T-bonds dampen volatility—$1,000 at 4.5% pays $45 yearly, steady as stocks gyrate.

The market’s discounting mechanism backs this: if everyone expects stocks to crash, T-bond prices rise as demand spikes, yields dip—already priced in. But with sentiment souring, the surprise could be a T-bond rally as stocks bleed.

Risks: U.S. Foreign Policy and Global Trust

T-bonds aren’t bulletproof. U.S. foreign policy and international trust could dent their appeal:

• Debt Ceiling Drama: Early 2025’s debt ceiling standoff—Congress stalling, Treasury burning cash—rattled markets. A default’s unlikely, but brinkmanship spooks foreigners holding $8 trillion in T-bonds (33% of public debt, per Treasury data). Yields spiked to 4.6% in February 2025 on nerves.
• Geopolitical Blowback: Sanctions on Russia and China trade wars push nations like China (down to $800 billion in T-bonds from $1.3 trillion in 2011) to diversify. If trust erodes, demand drops, prices fall, yields rise—hurting holders.
• Inflation Risk: Aggressive U.S. policy—say, tariffs jacking up import costs—could spike inflation past 3%. T-bonds’ fixed 4.5% loses real value if prices soar, unlike TIPS (inflation-protected).
• Currency Pressure: A weaker dollar from policy missteps (e.g., unchecked deficits) cuts T-bonds’ allure for foreigners. Japan’s $1.2 trillion stake could shrink if yen gains ground.

International trust’s the linchpin—lose it, and T-bonds’ “risk-free” tag wavers. Still, the U.S. hasn’t defaulted in 200+ years; it’s a long shot.

Final Thoughts: T-Bonds in the Spotlight

Treasury bonds got a bad rap—low yields, no flash—but 2025’s shifting sands could change that. At Vorpp Capital, we see them stepping up as stocks stumble, and we think that at least for a transitory period of uncertainty, investors may look into bonds. The stock market had one of its largest rallies in the last decade—up over 400% since 2009—and in times of total uncertainty, as 2025 seems to be, it might be good to sit on the sidelines and at least get a 4.5% return for doing nothing by owning bonds. They’re not sexy, but that steady $45 yearly on a $1,000 investment, backed by the U.S., beats a market rout. Younger investors might finally see the point—safety’s worth something when the S&P’s bleeding. Yet, foreign policy risks loom; if global faith slips, yields could climb, prices drop. For now, T-bonds offer a lifeline—reliable, ready for a comeback. Time to dust them off?

Do not consider this article as financial advice. We only showcase our own opinion. Always do your own due diligence before investing in alternative (volatile) investment opportunities.