The bond sell-off

A ghost is haunting bond markets – that of 1994. Back then, the Federal Reserve raised interest rates, having cut them in response to a financial crisis. And although that move was widely expected, bond yields rose sharply. Ever since then, markets have been jumpy about the possibility of tighter monetary policy – as we saw, for example, in the “taper tantrum” of 2013 when bonds sold off in fear of the Fed ending quantitative easing.

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