What Will a Bond Bear Market Look Like?

Interest rates have steadily fallen since 1981 and for bond values, that is the opposite of good news, as bond values are inversely related to interest rates. Meaning that bond values move in the opposite direction as interest rates.

As you are probably well aware, interest rates are about as close to zero as you can get. That means that they have only one direction to go – up. Bond values will fall as interest rates move up.

Which means, if the bond values fall, we will have a bear market in bonds. And given that no one has seen such a thing since 1981 (33 years ago), it is not surprising that very few people will be prepared.

If you are concerned about this issue, here’s a great article – http://www.marketwatch.com/story/what-a-bond-bear-market-really-looks-like-2014-02-25.

In the meantime, it’s always a good idea to have our team double-check your portfolio. Give us a call at (775)853-9033.

This commentary is not intended as investment advice or an investment recommendation. Nothing in the commentary should be construed as a solicitation to buy or sell securities. Past performance is no indication of future performance.

Chris Abts