Outside of a short blip in January, there has not been a period of time this year where the total return of the S&P 500 over the prior 200 trading days has trailed the total return of long-term US Treasuries. With the S&P 500 up 23.4% and long-term US Treasuries down 10.2% over the last 200-trading days, the current performance spread between the two asset classes is above 30 percentage points. In what has become a comparison that is increasingly looking as lopsided as matches between the Harlem Globetrotters and the Washington Generals, when people compare the two asset classes, there are very few who would pick Treasuries to win.
The chart below takes a look at the performance spread between the total return of the S&P 500 and long-term US Treasuries over a 200-day rolling period going back to 1989. Since then, the average spread has been 1.84 percentage points, which indicates that more often than not, the S&P 500 has outperformed long-term Treasuries (as is the case now). While it is common for equities to outperform treasuries, the current level of outperformance is relatively uncommon. In the chart below, anything above the green line indicates a performance spread of more than 30 percentage points. As you can see, the only other periods where we saw the spread exceed 30 were in 1999, 2003, 2009, and 2011.
What makes the current period somewhat different, though, is the period of time that the spread has been at elevated levels. With the spread first exceeding 30 percentage points back in March, we are now going on nine months that the spread has been at elevated levels. At some point, you would expect the two to revert back to their long-term historical average.