You are using an outdated browser. Please upgrade your browser to improve your experience.

Our views 19 April 2022

JP’s Journal: Bond sell-off continues

5 min read

This week is a short post as I am taking some time off to celebrate my 60th birthday. I share my birthday with the Queen (albeit she was born in 1926) – so I am used to waking up to the National Anthem on the radio.

Over the past week, bond markets have continued to fall – with yields rising in all areas except Japan. With 10-year yields at nearly 3% in the US, the sell-off has been severe. The causes are the same: expectations of higher interest rates and the fear that inflation is 'out of the bag'.

In the UK my focus has been on real yields with 50-year real yields rising from -2.6% to -1.6% in just four months. In price terms the longest dated UK index linked bonds have fallen from nearly £400 to £230. And this is an environment where implied inflation has actually risen.

Credit spreads have been more or less steady – with capital losses reflecting the move higher in long term yields.

1926 was the year of the General Strike and we were just entering a period of significant price deflation. 1962 was a year of modest inflation but we were on the cusp of a major inflation pick-up. What history shows is that there are no givens and economic situations can change quickly.

Which makes the tremendous service the Queen has given and the stability she has represented all the more remarkable, and a unique advert for constitutional monarchy.


Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested. Portfolio characteristics and holdings are subject to change without notice. The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.