After almost 10 years of unprecedented accommodative monetary policy both in the US and abroad, the fixed-income markets are trading at lofty levels never before seen in history. Let that sink in for a moment. Never before. Not during world wars, not during global depressions, never.
If you think this is a case of scare mongering or me doing my best Chicken Little imitation, it’s not. One third of global fixed-income bonds were recently trading at a negative yields! The global bond market has never been in a more perilous position, and I am surprised that there are so few publications ringing the alarm bells. We are reminded on a daily basis of such trivial risks that have no bearing on our everyday. But it’s tough to understand why there is such limited press highlighting such glaring risks. This is especially alarming since we lived through a fixed-income debacle in 2008 and know how devastating it was for those unprepared.