The U.S. stock market decided to take the optimistic view of the election of Donald Trump. But the story was different for U.S. Treasury bonds. The day after the election, they took their biggest plunge in five years. The Bloomberg Barclays Treasury Total Return index fell 2 percent from the election through Nov. 15.
That kind of loss hurts when it comes to an asset many investors hold for safety. But for some top money managers, including those at DoubleLine Capital and Loomis Sayles, the drop was a vindication of a contrarian view that bonds had gotten too expensive. Until the market closed on Election Day, Treasuries had gained 3.8 percent for the year. These investors contend that Treasuries will remain a losing bet as Trump ramps up spending in an effort to boost the economy. That could stoke inflation, push the Federal Reserve to raise short-term interest rates faster, and add to the supply of government debt in the process