A bond fund manager I met this week did what he does best — he gave a brief presentation laying out the case for buying bonds. The gist was that prices have dropped a lot, they’re nice and cheap, and we possibly have a global economic shock coming our way. Bonds love that kind of misery, so buy the dip, buy bonds.
Satisfied with his work, he told me he headed back to his desk only to see that in the short time he was speaking, global government bonds had taken yet another leg lower, kicking benchmark US borrowing costs another 0.1 percentage points higher.
To normies, that does not sound like much. To bond-market specialists, it’s a grindingly ugly move, particularly as it is just the latest in a relentless series of declines in debt markets since the war in Iran began almost three months ago.