The Lemon Fool

New Pensioncraft video "The Great Bond Sell Off: What Does it Mean?":

https://www.youtube.com/watch?v=v_ouYeSMPEU

You do not need to go to junk, but perhaps it is not wrong to wait a bit.

Dude knows his bond market well but repeatedly uses the term "sell-off" which grates for this investor. However, much like me, he sees current yields as about right and maybe with room to move up further, especially in the UK. IMV yield rises are due to: 1. changing inflation expectations 2. end of secular bond bull market, i.e. new bear trend -- i.e. almost all due to prior mispricing now being corrected. He waffles about the usual oil prices/QE-QT etc causes.

I still think low to medium tenor is the place to be if you have to buy gilts, but personally I'm avoiding gilts almost completely and focusing on shares.

Also interesting that the presenter takes the COVID period as a normal event in the market (this appears to be the prevailing orthodoxy) -- whereas my interpretation is that it was a shock interruption of the normal market and that to a great extent we should look through the discontinuities caused by COVID, else we come to some faulty conclusions about what is happening ("too rapid/unprecedented yield rises" etc). Starting history at Mar/Apr 2020 is an egregious error IMO.


GS

More from Mr Nakisa but this time on Quantitative Tightening and the BoE.

https://www.youtube.com/watch?v=luQS9WnLuAo

If the Bank of England is flogging off long dated bonds at a loss rather than awaiting maturity then the "yield on offer" to new buyers will increase (and I would imagine) cause investors to move to buying bonds, 'locking in' on a secure yield. Will they be moving out of riskier equities and into bonds and are we seeing the beginnings of this now?

Has the rise in bond yields got anything to do with buyers wanting "better rates" to match risk and a growing distrust of Central Banks manipulating economies with the potential for fiat currencies to fail ?

I may be well out of my depth asking that question though.