Bond Prices Plummet in 2022, But Some Investors See Opportunity Amid Falling Inflation Fears
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Bond prices have had a catastrophic few years, with 2022 being the worst since 1788. Prices are expected to fall again in 2023.
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With yields now attractive, some investors are jumping back into bonds. If inflation concerns have passed, bond prices may recover.
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Inflation is expected to remain under 3% and the Fed aims for 2%, so high inflation fears seem overblown.
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Determinants of the natural interest rate like demographics and China's economic trajectory change slowly, suggesting little change.
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Geopolitical uncertainty favors safe haven assets like Treasuries, but so far yields have actually risen slightly amid recent Middle East tensions.