NotSure wrote:Couple of comments. Gilts are not the only bonds.
To be clear, bonds in the context of the OP are US government bonds and notes and other developed country gilt-edged securities.
NotSure wrote:The bond bull market is over you say! I guess that explains why bond funds, especially longer duration ones, are down 30 or 40% from their peaks over the last year or two? I.e. a very firmly established bear market.
Sarcasm clear without the smiley! But in case anyone hasn't noticed the end of the [secular] bond bull market has been called many many times, often after "30% or 40%" falls and each time proved incorrect. This time I think it is clear: the yield trend was decisively broken last year, there has been a higher high and for proper confirmation of the new regime there needs to be a higher low, but I am willing to bet big that yields do not drop below COVID levels again.
NotSure wrote:Of interest to me is whether the bear market is over
I'm saying in this thread that the bear market will last a generation. That means a headwind for bonds the majority of the time.
MrFoolish wrote:GoSeigen wrote:I think it should be stressed that the secular bull market in bonds is now well and truly over and from here on there will be headwinds for bonds. It would be a very good idea for people to have a little think about the meaning of fixed interest, especially if they were not invested in gilts for large parts of the gilt bull market.
They are either good or bad going forward. It is irrelevant what people were invested in historically.
I think MrFoolish missed the point, which was about investors' judgement, and that DOES matter because the price at which you buy an asset is fundamental to the return you'll derive going forward. So actually it's 100% relevant. [If you argued (say) in 2014 that gilt yields could not possibly fall another 100bp but they did -- and more -- then shouldn't you ask whether you missed something about gilts that could cause a similar misjudgement?]
JohnW wrote:A nice broad overview of bonds ought not ignore inflation linked bonds, especially if the gun is being pointed mostly at government bonds. Linkers love inflation. And with the yield curve positive right out to 38 years this week for linkers, what’s not to like about a positive real return for nothing like equity-like risk?
I've touched on this already. Will just add that risk is what investing is about. I want to invest in stuff when the consensus believes that it carries maximum risk, and avoid assets that the consensus views as "safe".
Borderline wrote:I hadn’t looked at Gilts for donkey’s years before Liz and Kwarti made them interesting again.
If anyone thinks that what is driving gilts and bonds is a Truss/Kwarteng think they are sorely mistaken.
Borderline wrote:The downgrading of the USA credit rating is perhaps a wake up call for UK Gilt investors.
Might the same thing happen to us?
Might be on to something there...
OldBoyReturns wrote:Almost by definition the bond bull market was over once base interest rate hit near zero.
People called the end of the bond bull many times before that.
Wuffle wrote:You aren't supposed to KNOW, that's the point.
Sorry, don't subscribe to that defeatist point of view. See comments above about price, consensus and human judgement. I certainly don't deprecate the 60/40 idea though...
GeoffF100 wrote:The markets believe that index linked gilts and equities are equally desirable at their current prices,
By definition you mean? Is the market ever wrong in its judgement of desirability?
GS