The confidence that the worst is over
Although stocks fooled around all day yesterday until they were bought off, high-yield bonds rose, breaking further and further from the lows.
This once again underlines our thesis that the demand for government bonds is caused not only by the desire of investors to escape from risk (as some people think), but by the confidence that the worst is over.
Because inflation will also decline, and the Fed's position will gradually soften.
Otherwise, only 10-year government bonds would rise (making the curve flat), and high-yield bonds would not rise.
This once again underlines our thesis that the demand for government bonds is caused not only by the desire of investors to escape from risk (as some people think), but by the confidence that the worst is over.
Because inflation will also decline, and the Fed's position will gradually soften.
Otherwise, only 10-year government bonds would rise (making the curve flat), and high-yield bonds would not rise.