Monday, September 12, 2016

Deutsche Bank says 35-year party is over for bond bulls

Marketwatch reports:
The global economy is at an “inflection point” that could mark the end of a roughly three-and-a-half-decade bond rally while creating intense heartburn for politicians and other economic policy makers, Deutsche Bank analysts said Friday in a report.

“We argue that we’re about to see a reshaping of the world order that has dictated economics, politics, policy and asset prices from around 1980 to the present day,” wrote analysts Jim Reid, Nick Burns and Sukanto Chanda in the bank’s annual long-term asset return study.

Since the early 1980s, the global economy has been dominated by globalization and massive changes in demographics, which have also helped dictate asset performance. That era is now coming to a close, the analysts said, which means the economic, political, policy, and asset trends that accompanied it could soon begin to reverse.

“Extrapolation of the last 35 years will be one of the most dangerous things that policy makers and investors can do going forward,” they wrote. “This will likely make the next 35 years very different from the last 35 years.”
Just a reminder.