The looming bond crunch

Since the financial crisis, banks have offloaded their bonds to funds. If bonds slip up, and the funds can’t sell, this will be dangerous for ordinary investors. Simon Wilson reports.

What's happened?

A rout in government debt markets last week has intensified fears among analysts and investors over a lack of liquidity in asset markets, particularly bonds. Specifically, there have been several warnings that if a big sell-off in corporate and high-yield bonds arrives perhaps triggered by the start of US monetary tightening then bond markets could experience serious liquidity problems. In other words, bonds would become hard to sell at almost any price, potentially exposing private investors to huge losses.

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Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published Customers.com, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.   

Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.