Everywhere I go I seem to be seeing articles and commentary about how interest rates are surging and about to destroy the world we live in. Economists are having debates about a 10 bps move in Japanese Government Bonds. Mortgage brokers are telling you to buy your next house before interest rates surge all the way back to the level they were…LAST MAY. People who don’t understand the monetary system are still making the same old tired “bond vigilante” argument. And portfolio strategists are all panicking over the rise in yields and how it’s a harbinger of the “bond bubble” bursting.
Let’s bring some sanity to this discussion and put things back in the proper perspective. How bad has the bond market performance been this year? Let’s take a look at some of the major indices:
- iShares Aggregate Bond Index: -1%
- iShares Global Bond Aggregate: -1.75%.
Stop panicking. Things aren’t nearly as bad as they want you to think….
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.