Rising risks

End of the Bond Boom

  • Why it matters

    Why it matters

    The U.S. election has caused the bond market to slump, and many experts are predicting the end of the 35-year bull market for bonds. While there are still ways to make money with bonds, short-term investment is not one of them.

  • Facts

    Facts

    • The U.S. Federal Reserve has already begun raising interest rates and is expected to continue to do so. IN contrast, the European Central Bank (ECB) is likely to hold off.
    • The ECB, however, is expected to wind down its bond purchasing program this year.
    • Unexpected election results in the United Kingdom and the United States have European analysts on edge, particularly in light of upcoming elections in France and Germany.
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    Audio

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Garzarelli, Jesch
Bond experts Björn Jesch (left) and Francesco Garzarelli will be watching upcoming European elections very closely. Photo: Bert Bostelmann/Bildfolio

The last three decades of bonds’ bull markets are over, according to experts from Goldman Sachs and Union Investment. But it’s not all bad news.

Björn Jesch, head of fund management at Union Investment, reads Goldman Sachs analyses regularly. But he met Francesco Garzarelli, head of economic research at the American finance company, for the first time in conversation with Handelsblatt. Perhaps unsurprisingly, the two experts agreed on many points, particularly in relation to bonds.

When bond prices collapsed following Donald Trump’s election, some were already declaring the end of constant growth. Now, months later, both Mr. Garzarelli and Björn Jesch say the boom days are indeed over. But the sky is not falling.

 

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