Bonds might be useful going forward, but just because they’ve been coming up tails for the last 5 years does not mean they are going to start coming up heads.

There is a lot of hot air in the markets right now – AI hype, predictions of financial doom. How much should you care about the noise? It depends.

I’ve warned twice in the last year that negative carry makes the path to profit an uphill battle. The curve is now >50bps steeper since the first post — if you put the trade on, you’d be directionally right and very slightly poorer. The 2s10s steepener might be a good story, but it’s never been much of a trade.

You'd need to go back to the mid-1990s to find richer credit markets. So, sell credit? Not so fast. Remember, perspective matters.