In an article that argues exactly the opposite of our own house view, the Financial Times is contending that Trump may be about to spark a bear market for bonds. They argue that the best analogue to the present is the middle of the 1960s, when the economy was strong, inflation was low, and there was a lot of fiscal activism, including tax cuts and heavy spending. Between 1965 and 1970, when inflation had taken off, bond investors had gotten hammered, losing an estimated 36% over the five years.
FINSUM : We are not so keen on this argument, and favor the idea that the tax cuts will create less corporate issuance, and thus high prices as demand squeezes supply.
- bear market
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