- VangelisModerator01/09/2015 at 4:20 pmPost count: 144
May 2013 was perhaps the worst blood bath in bonds of the last 5 years, and it lasted for months.
It was driven by a misread of Fed intentions, and the market aggressively pricing in several rate hikes. Eventually, like ever other time since 2009, the market realized the Fed was not ready to move, and, international demand for bonds continued to grow, so bonds recovered, hit new highs and had a fantastic 2014.
Remember, virtually every big Wall Street firm and 95% of forecasts, and the Fed, have been building in rising rates – always about 1 year away. They have all been wrong the entire time. Eventually, rates should rise, but obviously the market can’t seem for forecast when very well. One last analytic opinion – historically the Fed has a really hard time moving rates when the market wants to go a different direction. 99% of what you see on TV about that misreads how the market sets rates — it is simply money flow.
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