The robust returns of the past 11 years have been caused by the downward shift of the U.S. yield curve—a general decline of interest rates. However, the extremely low interest rates today are an ominous sign for the future returns. Should the rates return to the 2003 levels, there would be a downward potential for the long-term bonds of approximately 20 per cent; or more if the bond yields return back to their long-term averages. (Prices of bonds fall whenever interest rates or bond yields go up.)
I will shun U.S. long-term bonds, as well as long-term bonds of any other sovereign or corporate issuer for the years to come. This is definitely no good time to take the risk for the low yields today.