chart du jour – the 30 year bond bull run – “time’s” about to be called…

The chart below displays rather more succintly than words can just how powerful has been the Great Bond Bull market over the last 30 years. 

We believe that the fundamentals are now stacked up high against the bonds over the medium to longer term as detailed in our piece in the last edition of our magazine (see here page 58 – http://issuu.com/spreadbetmagazine/docs/spreadbet-magazine-v8_generic). Investors and traders are ignoring the future impact of quantitative easing, debt monetisation, and of course prolific government borrowing and spending. Ultimately this will play havoc in the bond markets and cause devastating capital losses.

Equities by comparison tend to do much better in an inflationary environment and today have very compressed valuations. The stock market should be the beneficiary of long term capital reallocation from bonds to stocks in our opinion, over the next 10 years and peripheral Europe and Japan will likely be in the vanguard – everything is cyclical (some longer than outhers) and the long bond:short Japan play is well past midnight in our opinion.

Is tomorrow the day that we look back as the first tolling bell for the end of the greatest bond bull run in history?