Financial commentators love hyperbole. When US bond markets cracked this autumn, sending benchmark yields close to 3.25%, they quickly reached for their history books. Were concerns about the Federal Reserve (Fed) raising interest rates more quickly than expected more reminiscent of the 2013 ‘taper tantrum’ or the 1994 bond market crash?
Both were challenging episodes for investors, yet with hindsight they were short-term corrections in a multi-decade bull market that saw treasury yields fall from over 10% to below 1.5%. Two years on from those lows, is that bull market firmly behind us – are bond investors instead in a long and painful bear market?