The Bond Mkt 'Bonfire' Narrative Does Not Hold Up

Long rates are up again, nearing the high end of their recent range, spurring warnings of a bond bonfire globally. The alleged culprit: Reheating inflation tied to oil prices, which is prompting markets to price in central bank rate hikes across the developed world. It sounds simple and logical when you pair it with market-based indicators registering higher likelihoods of rate hikes. But we don’t think it holds up. Not only is there scant evidence resurgent inflation is at hand, but bonds’ fitness for a long-term portfolio doesn’t depend on central bankers’ whims. Read Full Article »