The marginal investor in bonds might be increasingly information insensitive. Last week’s inflation surprised to the upside and there are good reasons to think it will continue to move higher. Nominal GDP growth this year is expected to be around 10%, crude oil prices are steadily ticking higher, and the Administration wants trillions more in spending. Yet bond yields remain range bound. In a prior post we discussed classes of constrained investors who are buying …
Tag: passive investment
Published on January 3, 2021 by Joseph Wang Free
A number of prominent market commentators (see Mike Green at Logica Funds or Vincent Deluard of StoneX) have noticed that the growing passive investment target date fund complex has fundamentally changed how the financial markets work. While active investors invest according to a valuation metric, passive investors simply allocate capital without any reference to valuations. In recent years passive investors have steadily increased in influence and appear to be on an unstoppable march towards dominance. …