Two years ago, the 10 year yield was above 3%, and 5 years ago, it was sitting at 5%. And if you'd like to step back to the early 80's, you could get around 15% annually. With rates at these levels now, we would be very cautious about putting money into Government bonds. The incentive for investors to do so is just not there. Why would you buy a 10 year bond yielding 1.5%, when you could purchase a dividend paying company that yields more than 1.5% and offer the potential for appreciation over time. Sure, the "safety" factor exists in bonds compared to stocks, (since you know you're going to get paid back). But are they really that safe when so many investors are bidding to own these things at a time when there exist so many more favorable risk/reward scenarios?
The following chart showing the rate of the 10 year demonstrates the 30 year bull run we've had in Treasury prices. Though bond prices could certainly go higher in the short to medium term, we are very skeptical when looking further down the road.
