Challenge Accepted
We all freak out when the stock market tumbles.?
But lest we forget, the bond market is much bigger than stocks—some three times larger at $119 trillion as of 2021. Factor in the U.S. bond market, which accounts for 39% of that, and you start to see why markets in Europe, Bangladesh, and more or less everywhere bob in our wake.?
Now if bonds are coach seats on the airplane—putting aside some pretty bizarre incidents, still the safest way to travel—treasury bonds are first class. But what happens when the seats that come with pre-boarding, more legroom and free champagne lose a quarter of their value???
A treasury market decline that pushes higher costs on everyone commands our attention, at the very least.?
As you probably know, those costs bleed through every sector. Even with turmoil in Washington, cowardly violence, and now war breaking out in the Middle East, we can’t ignore what we’re seeing here at home.
All this without a quote-unquote credit event yet.?
That we haven’t seen one matching everyone’s prediction doesn’t mean one’s not cooking in the oven. Going by the forecast, this might mean we’re headed to the last place anyone on the Hero’s Journey wants to go—the foul, smelly cave where a supreme ordeal awaits.