Lacy Hunt Exits Long-Bond Bull Market After 44 Years
For four decades, Lacy Hunt and his firm Hoisington Investment Management were steadfast believers in the long-bond bull market. Their strategy—buying U.S. Treasury bonds during disinflationary periods—was built on a belief that high debt levels would suppress inflation. However, they have recently reversed course, concluding that equilibrium U.S. inflation is rising toward 3.5% to 4.5%, signaling higher long-term yields. The shift was not announced with fanfare but rather through actions: the firm significantly reduced its average bond maturity from over 20 years in September 2025 to under one year by June 2026, aligning more closely with a benchmark index. This move reflects growing concerns about inflation and rising interest rates. The long-bond bull market was supported historically by three factors: global supply shocks lowering prices, the recycling of foreign capital into U.S. assets, and demographic trends favoring disinflation. Now, these supports are eroding as trade policies shift toward security over cost efficiency.
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Topics: inflation expectations long-term investment strategies Treasury bonds