What to expect when the big bond sell-off hits

Looking at the data, it is clear the current level of interest rates and bond yields is low on both an absolute and relative basis. Moody’s Baa corporate bond yields, for example, have declined from over 13% in the mid-1980s to below 5% today. In addition to this, these yields were consistently higher than equity market earnings yields, as calculated from the inverse of the price to earnings ratio, from 1985 until the last couple of years. If you look at the ratio of bond-to-stock yields, the normal figure since 1985 has been 1.4 times, whereas today it is much lower, at around 0.8 times...