18 June 2014

The bond rally, secular stagnation & now Iraq

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money&calculatorThe global bond rally so far this year can be explained by a combination of soft growth, dovish central banks, short covering and increasing belief in “secular stagnation”.

  • It’s likely that the rally has gone too far and that sooner or later the focus will shift to when the Fed will start to raise interest rates. This could cause a resumption of the gradual rising trend in bond yields and volatility in shares.
  •    Nevertheless, history tells us that it’s only when rates reach onerous levels that they become a lasting threat to share markets and ultimately to economic growth. And that seems a long while a way yet.
  •    Iraq is a worry but as with numerous other geopolitical threats it’s unlikely to be enough to derail global growth.

Please click here to read the full article: the-bond-rally-secular-stagnation-and-now-iraq 18 june 2014

The author is an employee of Verante Financial Planning in Castle Hill, Corporate Authorised Representative of Magnitude Group Limited, Licence No 221557, Magnitude Group Limited ABN 54 086 266 202.