The Causes and Consequences of More Volatile Bonds - podcast episode cover

The Causes and Consequences of More Volatile Bonds

Apr 22, 202410 minEp. 258
--:--
--:--
Listen in podcast apps:
Metacast
Spotify
Youtube
RSS

Episode description

Since the advent of modern financial markets, bonds have always had the reputation of being conservative – rather like an elderly family lawyer in a leather-bound chair frowning at more jumpy and excitable stocks.  Bonds would never make you rich.  However, they would provide you with a moderate, steady and dependable income. 

This reputation was challenged in the 1970s and 1980s by Treasuries yielding more than 10%, in the wake of high inflation, and the explosive growth of the high-yield market.  In the decades that followed, yields drifted down in parallel with inflation but investor excitement was maintained by a steady stream of capital gains as well as income.  However, once monetary easing hit its peak in the days following the Great Financial Crisis, high-quality bond yields fell to levels that promised very little income and, at best, modest capital losses, assuming yields eventually recovered. 

For the best experience, listen in Metacast app for iOS or Android
Open in Metacast
The Causes and Consequences of More Volatile Bonds | Notes on the Week Ahead podcast - Listen or read transcript on Metacast