The golden age of low volatility is over for bond holders

The golden age of exceptionally low bond volatility is drawing to a close, and investors would be wise to lock in any handsome profits before monetary policy shifts, explains Lombard Odier's Grant Peterkin.

Many of us have put our property on the market and seen it languish there for months with barely a flicker of interest. We therefore have first-hand experience of poor liquidity. Bond investors would do well to remember this lesson, particularly since the current low volatility in bond markets is mostly caused by central banks buying back huge swathes of bonds in the name of monetary stimulus. Lock in gains But these exceptionally low levels of volatility will not be around for ever. The same applies to the handsome profits that many investors have enjoyed from increases in the val...