Beyond the low-rate doldrums | Citywire

Bond markets have benefited hugely from the bull market of the past 30 years, as falling interest rates have led to a rise in bond prices. Since the US has entered a rising rates environment, the likelihood is that Europe will soon follow suit as it enters a phase of (slowly) increasing rates.

While an increase in rates is very much to be welcomed by bond investors from a yield perspective, in the shorter term it makes for a new challenge. A move up in interest rates is inherently negative for bond prices, and a significant move in rates could even lead to turbulence in the stock markets. It raises the question of which investment strategies enable attractive returns in a rising rate environment.

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Reto Ineichen and Christoph Beck
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