Many investors around the globe are familiar with the super-secular bull run that bond markets experienced in the three decades since the early 1980s (represented here by U.S. and U.K. long-term nominal yields – see Chart 1).
Investors may forecast a corresponding bear run going forward – but first, they may want to take a longer look into history (see Chart 2). It turns out the recent bull run was actually the symmetrical counterpart to the bear run of the 1950s through the 1970s.
In fact, if we take a super-super-super-secular view of long-term yields (see Chart 3), we find that the high interest rate environment of the 1970s and 1980s – not today’s low yield environment – was the aberration. The journey ahead is likely to be along a more traditional low yield path.