The meaning of ‘historic drop’

It’s been the worst year for the bond market since 1842, said Jason Zweig in The Wall Street Journal. That’s not a typo. Not since the bottom of a pre–Civil War depression has the broad bond market performed worse in a complete year than what’s happened so far in 2022. “Inflation is like kryptonite for bonds, whose interest payments are fixed and thus can’t grow to keep pace with rises in the costs of living.” As a result, prices for bonds have fallen 10 percent this year. But many investors “may be too pessimistic.” The intricate math of bonds means that yields rise as prices fall, and some yields are currently brushing their highest levels in years. “Over the long run, the total return of bonds depends far more on their income than on changes in price.”