In times of economic uncertainty, it used to pay to check with the bond market to see what signals it was sending.
Is the economy headed into a recession? See whether yields are declining. Is inflation about to accelerate? See whether yields are rising. Bonds were the economy’s crystal ball. Now, they may be no better than a Magic 8 Ball in helping decipher the future.
Bond traders seem to be as confused as anyone at the moment. That can be seen in JPMorgan Chase & Co.’s weekly survey of bond market participants released on Wednesday. It showed the percentage of respondents expecting no change in prices and yields for U.S. Treasury securities has surged to 74%, the most since mid-2017. Just 25% expected Treasuries to either rally or decline.