Market Thinking is subtitled ‘making sense of the Narrative’ because markets are as much about the stories we tell ourselves as any of the so called fundamentals.

March is a key month for most asset allocators, as the options expiry on the third Friday of the month is one of the first major opportunities to ‘reposition’ portfolios by putting on new hedges, rolling existing ones, or allowing them to expire at ‘triple witching’.

One of the most important things to understand about Bond Markets is that the day to day movements have surprisingly little to do with the fundamentals that the financial economists spend the whole day talking about.

With all the excitement of Covid, US Elections, Robinhood traders and now Bond Markets, it’s been easy to forget our friends over at SoftBank, the company that thinks it’s a bank, or a hedge fund or a Venture Capitalist. Or something.

The post below is the outline text sent for an article in the Australian Financial Review (AFR) looking at the triple threat faced by bond markets. As our recent posts have suggested, we see Bonds as the biggest short and medium term threat to equities, but more important we can see a situation where the yield curve steepens very sharply causing an existential crisis for many bond managers and their underlying investors.