BMO GAM's Prior: Volatility is nothing to fear

"Bonds are boring," so the adage goes. This statement has never been less true when we look at markets today.

The opportunity set has exploded as the withdrawal of banks from the lending space created a new market in yielding assets at a time when the hunt for yield was seemingly unquenchable.  The passage of time and lack of drama in either inflation or default cycles has seen an evaporation in reward while the commensurate risks have risen. But just because your house has not burnt down, it does not mean you should not have insurance against it ever happening.  Will curve steepening hit stock valuations? Insurance in bonds should take the form of term premium, seniority in capital str...