Weekly Roundup - May 30, 2025 - Are the Bond Vigilantes Back?
Is the Bond Market in Trouble? A Look Beyond the Headlines
Happy Friday! As we wrap up the week of May 30, 2025, let’s dive into one of the biggest stories in financial markets right now: the rise in long-term interest rates.
You’ve probably seen headlines warning that these higher yields spell disaster for markets—but do they really?
Rising Yields Aren’t New… or Catastrophic
Long-term U.S. Treasury yields are creeping toward the 5% mark, and it’s sparked plenty of commentary suggesting we’re headed for economic turmoil. But when we zoom out and look at historical context, the picture is far less dramatic.
In fact, yields were at similar levels in the late '90s. And what happened after that? Equities and even short-term bonds delivered solid returns. History doesn't support the idea that hitting a 5% yield is a financial doomsday signal.
So before reacting to scary headlines, it's worth asking: is this really a signal of trouble—or just noise?
Are Bonds Really Struggling?
Cullen Roche, a respected U.S.-based investment manager, recently highlighted a chart showing intermediate bond fund performance over the last year and a half. The result? Far from doom and gloom, returns have been relatively steady. The bond market, while adjusting to a new rate environment, isn’t exactly in crisis mode.
Don't Let Crisis Predictions Steer Your Strategy
Ben Carlson, another thoughtful voice in the investment world, reminds us of the dangers of always expecting the worst. Since 2008, there's been a surge in market commentary predicting disaster. While it can feel intellectually satisfying to anticipate the next crash, investing based on fear hasn’t historically led to better results.
Ben's message is simple but powerful: the future is unpredictable, and staying optimistic about long-term investing pays off.
Government Spending, Headlines, and Perspective
Carlson also touches on rising government spending in the U.S.—a frequent source of market concern. But again, spending trends often continue regardless of political rhetoric. And while media coverage tends to spotlight problems, broader global trends often show improvement in areas like quality of life, economic opportunity, and technology.
In other words, despite the headlines, the world isn’t falling apart. In fact, much of it is getting better.
Active Management vs. Simplicity
Larry Swedroe, one of my go-to authors on investment strategy, brings more perspective. He highlights data showing that most institutional money managers—those you'd expect to “beat the market”—actually underperform their benchmarks once fees are factored in.
The takeaway? You don’t need a flashy, high-cost strategy to succeed. A simple, diversified, low-cost approach has consistently delivered strong long-term outcomes. That’s the philosophy I advocate for all my clients.
Bonus: FIRE, Renting vs. Buying, and More
To round things out, I’ve also linked to a great video by Ben Felix. He tackles some of the most hotly debated financial topics—renting vs. buying, income investing, and the FIRE (Financial Independence, Retire Early) movement. Whether you agree or disagree with his takes, it’s well worth watching for a deeper dive into what actually works in personal finance.
Final Thoughts
The financial news cycle can be overwhelming, especially when interest rates or market shifts dominate the conversation. But remember: short-term noise rarely tells the full story. Staying grounded in a disciplined, long-term investment approach continues to be a reliable way forward.
If you have questions or want to chat more about how these trends affect your portfolio, feel free to reply to this post or book a time on my calendar.