Deutsche Bank: Bond Investors Are About to Get Crushed as a New Global Cycle Kicks Off

Weak growth, higher inflation, and stagnant productivity in developed countries will roil bond investors in the decades to come, as the benign global forces that have buoyed returns on financial assets for the past 35 years stage a sharp reversal. That's the big-picture call from Deutsche Bank AG analysts who predict an oncoming lurch towards trade and financial protectionism — combined with aging populations and weak worker output — will intensify financial repression as a new multi-decade-long economic cycle kicks off this year.

"In our opinion we're getting closer to a binary outcome for the global economy and financial markets," the strategists, led by Jim Reid, wrote in a report on Thursday.