US bond’s worst quarter in more than 40 years has come to a close. The
question for many investors now is whether it is time to buy the
biggest dip in recent memory.

The Bloomberg US aggregate bond index largely US Treasuries highly
rated corporate bonds and mortgage-backed securities returned minus 6%
in 2022 through Wednesday on track for the biggest quarterly loss
since 1980. Yields on short to medium-term treasuries which rise when
their prices fall have logged their biggest quarterly gains in
decades.

With the two-year yield rising the most since 1984, and the five-year
yield the most since 1987. Before the performance of bonds has robbed
investors of the traditional Haven at a time when stocks and many
other markets have been swinging sharply thanks to factors including
the Federal Reserve’s first interest rate increase since 2018, and the
war in Ukraine.

Yields on treasuries largely reflect expectations for what short-term
interest rates will average over the life of a given bond. Investors
dramatically increased those expectations over the past three months
driving bond prices down and yield up thanks to a run of high
inflation readings and FED officials sounding ever more concerned
about that data.