Market positive for bond investors

The pause in the bond rally that began in the early part of the year is just that: A pause. Further tightening of interest rates by the major central banks cannot be ruled out, but in our opinion it will prove unnecessary and would have to be reversed. This scenario is especially relevant in the US and the UK. The combination of expensive labour, higher borrowing costs, higher energy prices and foreign currency losses will eventually overwhelm the benefits from increased productivity. In the US these productivity gains are large but elsewhere less so. The result should be a reduction i...