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Podcast: Notes on the Week Ahead
Episode: The Causes and Consequences of More Volatile Bonds
Description: Since the advent of modern financial markets, bonds have always had the reputation of being conservative – rather like an elderly family lawyer in a leather-bound chair frowning at more jumpy and excitable stocks. Bonds would never make you rich. However, they would provide you with a moderate, steady and dependable income.Â
This reputation was challenged in the 1970s and 1980s by Treasuries yielding more than 10%, in the wake of high inflation, and the explosive growth of the high-yield market. In the decades that followed, yields drifted down in parallel with inflation but investor excitement was maintained by a stea...