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Patrick Boyle On Finance
The Big Bond Selloff!
Oct 20, 2023
The podcast discusses the recent bond-market sell-off, with losses resembling those of stock market crashes. It explores the impact of higher interest rates on stakeholders, including investors, consumers, businesses, and pension funds. The chapter also delves into the consequences of rising rates on fixed income allocations and leveraged buyouts. Financial engineering strategies and their implications on private equity-backed companies are explored. The effect of rising rates on the cost of equity capital and Jerome Powell's speech on inflation control and economic well-being are also discussed.
19:49
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Quick takeaways
- The recent increase in the 10-year US Treasury yield has resulted in significant losses for bond investors, making it the greatest bond bear market of all time.
- Higher bond yields have implications for consumers and businesses, impacting affordability, real estate prices, and the ability to service debt.
Deep dives
Impact of Rising Bond Yields on Investors
The recent increase in the 10-year US Treasury yield to its highest level since 2007 has resulted in significant losses for bond investors. Analysts are calling this the greatest bond bear market of all time, with long-term Treasury ETFs experiencing an 8.5% decline over the last month. This loss is devastating for risk-averse bond investors seeking stable returns and income, and it exceeds the losses experienced during the 1981 bond market downturn. The increase in bond yields has been driven by inflation expectations and concerns over government spending plans, impacting various sectors and raising anxiety among investors.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode