Hoisington Investment Management, a firm that has spent decades saying long-term US government bonds were a great investment, has switched sides and now expects those bonds to lose value, Bloomberg reported on July 16, 2026.

The turnaround was fast. In late 2025, Hoisington published a report saying they expected long-term bond yields to fall — which would mean bond prices would go up. By early 2026, they had changed their mind and expected yields to rise instead (Hoisington Q4 2025; Hoisington Q1 2026). The July 16 Bloomberg report confirms the firm has now gone fully bearish on bonds.

Here is the key relationship: bond yields and bond prices move in opposite directions. When yields go up, the price of existing bonds goes down. So if Hoisington is right that yields will rise, anyone holding long-term bonds would see their value fall.

Hoisington and its chief economist Lacy Hunt said the reason for the change comes down to two big forces: growing government deficits and rising demand for borrowed money across the economy (Bloomberg; Advisor Perspectives). They said both inflation and long-term interest rates will keep trending upward because of these structural problems, not because of any temporary issue.

Think of it this way. The government runs a deficit when it spends more than it collects in taxes. To cover the gap, it sells bonds — essentially IOUs. When deficits stay large year after year, the government keeps pumping out more and more bonds. At the same time, businesses and other borrowers also need money. All of that borrowing competes for the same pool of savings. When there are more bonds for sale than buyers want, the government has to offer higher interest rates to attract them. That pushes yields up across the board.

The inflation piece adds another layer. If the government's borrowing is backed by the central bank creating new money, or if all that spending pushes demand beyond what the economy can produce, prices rise. When investors expect inflation, they demand higher yields on bonds to make up for the fact that the fixed payments they receive will be worth less in the future.

What makes this surprising is how quickly it happened. In about six months, Hoisington went from saying lower yields were "increasingly likely" to saying the opposite. That is not a small adjustment. It is a complete change of direction.

The broader context is that the long-running belief in ever-falling interest rates has been losing supporters. Since the 2008 financial crisis, many investors assumed that a combination of low inflation, heavy debt burdens, and aging populations would keep pushing rates down. Hoisington was one of the loudest voices for that view. Their departure raises a real question: have bond prices already adjusted to reflect these new concerns about deficits and inflation, or is there further to fall?

For people who own long-term bonds as a safety net against stock-market drops, this matters. For years, the pattern was that when stocks fell, long-term bonds rose, cushioning the blow. If Hoisington is right and we are entering a period where both inflation and interest rates climb, that pattern could break down. Bonds could lose value at the same time stocks do. The safety net that many investors count on is exactly what is at stake.

For now, Hoisington has made its call. Whether the forces they describe actually play out, and whether the market has already adjusted, are questions that only the data will settle in the coming months.