Maybe Bonds Don't Care About Inflation
Maybe the bond market will never care about inflation.
You have to go back to the early 1990s to find a time when changes in CPI had any correlation to changes in 10-year US Treasuries. As Ed Yardeni might say, the bond vigilantes don't discipline the market anymore.
Why? Central bank financial repression, foreign exchange "management" by trade partners, and changing bank regulations since the financial crisis all played a role. Perhaps the bond market is dominated by price insensitive buyers who don't care about negative returns.
This bond market reminds me of the Yogi Berra restaurant quip: "Nobody goes there anymore; it's too crowded."
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
Lloyds Intrepid LLC is doing business as Lloyds Intrepid Wealth Management. Lloyds Intrepid LLC offers investment advisory services in the State of Texas where registered and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Lloyds Intrepid LLC and its advisers do not provide legal, tax or accounting advice. Lloyds Intrepid LLC formulates retirement plans, investment strategies, portfolio construction and investment due diligence for clients with signed investment advisory agreements with us. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. All opinions and outlooks are subject to change.
© 2021 Lloyds Intrepid LLC