The month of October always had a frightful reputation.
The market declines of 1929 and the 1987 crash both happened in October even if they ultimately had very different outcomes, one leading to the Great Depression and the second one being just a painful hitch in a major secular bull market.
October 2018 was no different. What a month !
Investors finally take notice of the return of inflation… The main issue last week was the sharp sell-off in US bonds with yields rising 20 basis points as investors finally…
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In our various posts since last year, we have been warning about the return of inflation and considered that this was not the time to be invested in fixed rate bonds in any of the major bond markets.
The extra-ordinary measures taken by the US, European and Japanese Central Banks to fight the deflationary effects of the 2008 financial crisis led to a significant period of abnormally low interest rates at the short end where central banks guide interest rates, and at the long end – bonds – through the massive accumulation of long dated fixed rate bonds on the Central banks’ balance sheets.