Markets were mixed on Wednesday.
James Meyer, chief investment officer at Tower Bridge Advisors, wrote in an email to clients that the mood “continues to be positive”.
However, Remo Fritschi, institutional sales manager at ADS Securities, wrote in a note that “the appetite to push higher still seems lacking”.
Oil rebounded, with both West Texas Intermediate and Brent crude rising 1.8 percent.
US Treasuries fluctuated between gains and losses to finish little-changed on Wednesday.
However, Paul Schmelzing at Harvard University sees a bond market reversal coming.
The economist Eugen von Böhm-Bawerk once opined that “the cultural level of a nation is mirrored by its interest rate: the higher a people’s intelligence and moral strength, the lower the rate of interest”. But as rates reached their lowest level ever in 2016, investors rather worried about the “biggest bond market bubble in history” coming to a violent end. The sharp sell-off in global bonds following the US election seems to confirm their fears. Looking back over eight centuries of data, I find that the 2016 bull market was indeed one of the largest ever recorded. History suggests this reversal will be driven by inflation fundamentals, and leave investors worse off than the 1994 “bond massacre”.