David Ader, Columnist

Too Much is Being Made of the Bearish Bond Data

When it comes to a bear market in fixed-income assets, expect more of a teddy bear than a grizzly.

February 21, 2018 at 4:30 PM UTC

David Ader is the former chief macro strategist at Informa Financial Intelligence and held similar roles at CRT LLC and RBS/Greenwich Capital. He was the No. 1 ranked U.S. government bond strategist by Institutional Investor magazine for 11 years, and was No. 1 in technical analysis for five years.

It's a teddy bear market in bonds.
Photographer: Christopher Furlong/Getty Images

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“The sky is falling; the sky is falling!” Substitute “bond prices” for “sky” and you’ll have a sense of the mood in the fixed-income market the last few months.

I won’t diminish the potential bearish impact the swelling U.S. budget deficit will have on the bond market as supply surges in the months and years to come. But we don’t know how much it will affect the market if there is no accompanying increase in inflation and gross domestic product. Still, that hasn’t stopped people from making too much of bearish data, while ignoring a soft underbelly that challenges the bearish narratives. That’s what I’m about to do.