By: Editorial Team, StoneX Media
Asset allocation used to be a real question about how much of a portfolio belonged in bonds and how much belonged in stocks. Low bond yields answered it by default, because a long-dated Treasury paying almost nothing gave investors no reason to hold any of it, and capital went into equities instead. That was not an accident of the market but the intended effect of post-crisis policy, which is why the equity trend since has been relentlessly upward and unusually violent. What matters now is that the mechanism is reversible, and Treasury supply is the thing that reverses it.
James Stanley is a Senior Market Strategist at StoneX Media whose career has moved across asset classes in sequence, beginning with equities in 1999 and adding options, then fixed income in 2006 and foreign exchange in 2009.
Low Treasury yields did not make bonds a bad investment so much as an irrelevant one, and that was the point. When investors fled into bonds during the financial collapse they drove yields down, and as Stanley describes it, that left policymakers with an awkward problem, because "if you're at the Federal Reserve, you have a very real problem that investors don't want to take on risk". Buying bonds and pushing yields lower was the fix, since "if you buy bonds and yields go down, all of a sudden it makes that alternative asset class unattractive as an investment", he adds. The effect was to make a 100% equity allocation look reasonable rather than reckless, which is close to the opposite of how the same investor would have been taught to think about it a decade earlier.
"I think that's one of the reasons that these pullbacks have been bid so aggressively, because there hasn't been a requisite option", Stanley says of the recurring double-digit drawdowns in the S&P 500 since the financial collapse. The trend has been up and to the right, but violently so, with pullbacks arriving often enough to read as a positioning artifact rather than a change of direction. Opportunity cost is the variable that has been absent throughout, and its absence is what made buying weakness the default rather than a judgment call. Consequently the strength of every bid has said as much about the lack of alternatives as about conviction in the assets themselves.
Treasury refunding supply is the mechanism that would put a paid alternative to equities back in front of investors. A large block of long-term U.S. government debt matures over the coming 12 months, and refunding it means issuing new debt into a market already absorbing heavy issuance, much of which covers interest on debt already outstanding. According to Stanley, the pressure shows up from the buyer's seat, with "a Treasury Department that needs to auction off trillions of dollars in debt in the next 12 months, more supply" setting the price and yield arithmetic for anyone holding a bond portfolio. The constraint this removes is a simple one, because "if capital is going to leave stocks, it has to go somewhere", and a long-dated Treasury paying a competitive coupon is somewhere.
From detailed guides on how to trade major assets to quarterly market outlooks and special reports, we offer FREE access to the articles you need to successfully implement "global macro" style trading!
Sign Up
--- Written by Gus Farrow, Senior Manager, StoneX Media
--- Expert: James Stanley, Senior Market Strategist, StoneX Media
The subsidiaries of StoneX Group Inc. provide financial products and services, including, but not limited to, physical commodities, securities, clearing, global payments, risk management, asset management, foreign exchange, and exchange-traded and over-the-counter derivatives. These financial products and services are offered in accordance with the applicable laws in the jurisdictions in which they are provided and are subject to specific terms, conditions, and restrictions contained in the terms of business applicable to each such offering. Not all products and services are available in all countries. The products and services offered by the StoneX Group of companies involve risk of loss and may not be suitable for all investors. Full Disclaimer. This content is not intended for residents of any particular country, and the information herein is not advice nor a recommendation to trade nor does it constitute an offer or solicitation to buy or sell any financial product or service, by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Please refer to the Regulatory Disclosure section for entity-specific disclosures. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc. The information herein is provided for informational purposes only. This information is provided on an ‘as-is’ basis and may contain statements and opinions of the StoneX Group of companies as well as excerpts and/or information from public sources and third parties and no warranty, whether express or implied, is given as to its completeness or accuracy. Each company within the StoneX Group of companies (on its own behalf and on behalf of its directors, employees and agents) disclaims any and all liability as well as any third-party claim that may arise from the accuracy and/or completeness of the information detailed herein, as well as the use of or reliance on this information by the recipient, any member of its group or any third party.
© 2026 StoneX Group Inc. all rights reserved.
Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
For more than a decade, central banks absorbed government debt for policy reasons rather than for return, and that made them almost indifferent to price. As those holdings roll off, the investors left holding the bonds are the ones who count the risk, and the long end is repricing accordingly.
Low bond yields did more than make equities attractive, they removed the alternative entirely and turned every pullback into a buying opportunity. Treasury refunding supply over the next 12 months is what could put a paid alternative back on the table.
U.S. 30-year Treasury yields climbed to a fresh 19-year high and then steadied, and the way they moved may matter more than the level. The calm at the long end, set against a heavy year of U.S. debt issuance ahead, is shaping up as a quiet confidence test for the Treasury market.
Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.
Reach
With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency
As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve; our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise
From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.
