Rate normalisation will present headwind for govt bonds

ON BONDS

Ashburton's Tristan Hanson discusses where to find value in the bond markets.

Monetary policy remains on an emergency footing in much of the industrialised world, most obviously the US, UK and Japan. But, with the exception of Japan following the recent disaster, economic and financial conditions globally no longer require the assistance of a life support machine. Bond investors therefore face the prospect of rate normalisation around the world over the next few years. But what is normal? When assessing the plausibility of current interest rate forecasts and bond yields, it can be useful to compare expectations with the previous decade to give a rough guide of the...