We are 5 years into the worst period for bond investors since the 1970s. Many thought the low point for interest rates and consequently the peak for bond prices was just after the financial crash when interest rates were pushed to zero by the central banks. However the central banks then came up with negative interest rates and intervened to buy up government bonds through quantitive easing. Therefore the peak in bonds was pushed out by another decade to 2022 and the end of covid pandemic. Since then inflation has been resurgent due to firstly the pent up demand driven by the covid restrictions and then by the wars in ukraine and iran restricting the flow of energy and essential commodities to the global markets.
Aswell as that governments are running deficits and have to compete for funding with the AI and tech companies also tapping into the money markets for funding. All these factors have pushed interest rates to multi decade highs but still no where near the rates reached in 1970s or early 80s.
Some say now is a good time to invest in bonds due to the relatively high interest rates however the interest rate cycle looks no where near peaking and could have alot more to run. I think with all the stuff happening now we are only in 1975 or 76 regarding where interest rates could go. Now this is also bad for equities but its very bad for bond investors.
Aswell as that governments are running deficits and have to compete for funding with the AI and tech companies also tapping into the money markets for funding. All these factors have pushed interest rates to multi decade highs but still no where near the rates reached in 1970s or early 80s.
Some say now is a good time to invest in bonds due to the relatively high interest rates however the interest rate cycle looks no where near peaking and could have alot more to run. I think with all the stuff happening now we are only in 1975 or 76 regarding where interest rates could go. Now this is also bad for equities but its very bad for bond investors.
