What’s the bond market telling us?

With yields on UK gilts and US Treasuries at record lows, are government bonds in a bubble? Or is the market warning us to expect years of Japan-style deflation and stagnation? Phil Oakley investigates.

Most small investors spend the majority of their time looking at stock markets. However, I've always believed that to get a deeper understanding of what's really going on, the best thing you can do is to try to figure out what the bond market is telling you.

Why? Because the yields on government bonds have a major impact on the price of virtually all investment assets. Put simply, rising yields tend to reduce the value of assets, while lower ones tends to make them go up.

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Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.

 

After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.

 

In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for MoneyWeek in 2010.