The bond market is sending shock waves and Wall Street insiders are worried
Rising yields isn't good news: when yields go up, prices go down. That means the bonds people already own are suddenly worth less money.
Some market watchers are blaming fund managers trying to out-trade the Federal Reserve, others, think it could be a sign of deeper problems.
With the bond market once again posing challenges to investments, Business Insider spoke with traders and hedge fund pros about what they see happening with bonds and Treasuries, and what investors can expect next.
- One banker points out that if the cost of leverage continues to increase, mega-transactions between corporate players could grind to a halt.
- One hedge fund manager said he expects bond market turmoil to continue, up to (and, especially, immediately after) the Federal Reserve makes a final decision to raise rates.
- "[Last week] was one of the roughest weeks we've had," said a retail advisor at one large investment bank, who was not authorized to comment on the record.
- "Confidence is very fragile" in the bond market, one bank analyst said. "All the firms that use bonds are going to see volatility that they're not used to."
Perhaps more concerning, at a conference Wednesday, former Federal Reserve chairman Alan Greenspan predicted yet another 'taper tantrum' when the central bank does raise rates. This, too, would not be good news for a bond market that has been volatile as of late.
