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Dalio: 1% Bond Yield Rise Will Produce Biggest Bear Market Since 1981

JAN 25, 2018

ORIGINAL SOURCE: Why the Next Downturn “Will Not Look Like 2008” by Wolf Richter at Wolf Street on 1/24/18

Nine years of “scorched-earth monetary policies” have left us with a market that barely remembers when it was anything other than essentially free to borrow money. Remember when you could easily find 5% returns in a 1-Year CD? That was over 15 years ago.

Ray Dalio of Bridgewater Associates sees peril in this: “There is a lot more interest-rate sensitivity in the economy…Like a 1% rise in bond yields will produce the largest bear market in bonds that we have seen since the 1980 to 1981 period.”

A little perspective on just how inconceivable that sort of market seems today:

On September 21, 1981, the 30-Year yielded 15.20%. Today, the 30-Year yields 2.89%.

On September 23, 1981, the 10-Year hit 15.84%. Today, the 10-Year yields 2.63%.

Here's another take on Dalio from Wolf Richter, Please see the rest here; Why the Next Downturn “Will Not Look Like 2008”