In thr past, the fund neutral rate is around 2% (netural rate means Fund rate equals to inflation rate). If you read my post yesterday about TLT, then you can do a calculation and roughly we would say 20Y bond could eventually drop to 3-3.5%.
However, Fed yesterday surpised the bond market with a projection that their neutral rate would essentially settle at around 2.9% by 2026. This is a big long term bearish sign for long bond. It essentially says long bond, over the time, will settle at around 4-4.5%, and yesterday long bond was already at 4.02%
As you can see, the risk/award is just not there for long bond.
I do not know where long bond will be today or next month, and I do think it might recover a bit. But the trend has changed for long bond.
