Bonds: what lies ahead

BONDS

The past six months has seen the distress in bond markets recover. But, given the sovereign debt issues peripheral Europe, can the party continue? asks James Foster from Artemis

Remember what the Queen called the year Windsor Castle caught fire? An annus horribilis. Since the Lehman demise, bond investors have ignored Baron Rothschild’s advice to: “Buy when there is blood on the streets: even when it is your own.” Instead, they sold, and bond prices began to assume Armageddon. At least until recently, the past year has been the opposite for bonds: an annus mirablis, an amazing year, and an extraordinary run up in bond markets. We were confident the extreme distress in bond markets during 2008/09 would recover. But the returns surpassed even our best hopes. Espec...