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The great bond bubble was the most obvious bubble EVER. Interest rates were more or less at zero at the short end and therefore across the yield curve they had to be pretty damn close to the top, if not the outright top. Therefore the only direction for rates was up, and down for principal.

The bond chap’s however wanted to extract the last pennies, playing on the back of the Federal Reserve. Well when Bernanke came off the reservation, this is what happened to the smartest guys in the room.

bond funds

They got crushed.

10yr

At the moment no-one really knows where rates will stabilise. They will obviously stabilise somewhere, but they have been suppressed for so long now that no-one really has any idea.

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