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2021-10-06

Forty years ago start of a bull market in bonds. No one saw it coming.

Have I got a deal for you. You can buy mortgage bonds priced to yield 17.85% over the next 10 years or 18.75% over the next 20 years. They’re investment grade, not junk bonds.

The only catch? You have to buy them on Sept. 30, 1981.

Even today, nobody has a clear explanation of why bonds suddenly seemed more attractive on Oct. 1, 1981, than they had the day before.

Because we can see the past as clear as day, it’s all too easy to forget that the future is always enshrouded in fog.

“Things can’t go on forever at these rates,” says Mr. Gross. “Interest rates can’t stay this low [net of inflation] because savers, whether it’s Mom and Pop in Des Moines or big pension funds, can’t earn anything on their investment.”

 He adds, “For the economy to survive, at some point interest rates have to regain some semblance of an attraction to savers. Otherwise the savings function will be destroyed.”

No one knows when that time will come—but come it will.

Jason Zweig WSJ Oct. 1, 2021 

https://www.wsj.com/articles/when-interest-rates-turn-the-corner-11633101123


Bill Gross Bonds are trash

Bloomberg 2 september 2021

https://englundmacro.blogspot.com/2021/09/bill-gross-bonds-are-trash.html


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