(Bloomberg) Is the bond rout over? You ain’t seen nothing yet and stock investors should take note.
The global equity rally that’s repeatedly shrugged off rising geopolitical uncertainty now faces a new test: the apparent certainty of higher borrowing costs. The spike in bond yields is just getting started, according to legendary fixed-income investor Jeffrey Gundlach. For Ray Dalio at the world’s largest hedge fund, the era of central-bank stimulus is now over.
Bond market stress showed signs this week of spilling over into stocks as well as other assets from gold to silver. Equities have reached all-time highs even in the face of North Korean missile tests, Persian Gulf confrontations and Washington turmoil this year, as investors bet the global economy can withstand higher interest rates. That hurdle is getting closer.
