Interest Rates and Bonds Today
Historic levels of central bank induced liquidity around the world, and exceptionally low short-term U.S. interest rates have driven risky asset price appreciation across asset classes globally. To avoid (or reduce) an inflationary crisis or an asset bubble collapse, central banks and governments must sooner or later withdraw unprecedented stimulus programs, including raising short-term interest rates. When that happens, there will be significant price adjustments that require portfolio adjustments. Staying on top of the interest rate picture is key.