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Bonds Are A “Return-free Risk”

We continue to view the bond market as a “return-free risk”.  It is a very crowded trade, as institutions and individuals have fled what they perceive as riskier equity assets, for what they believe is solid income generated by bonds.  Yet, with yields as low as they are today, it only takes a small move down in bond prices to wipe out an entire year’s income generated by bonds.  Read the recent story in Bloomberg here.

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