Tip-toeing back to bonds already: Mike Dolan

Tip-toeing back to bonds already: Mike Dolan

LONDON- Inflation is raging, interest rates are rising and bonds look like treacherous investment waters - all of which make arguments for a dip back into the fixed income vortex intriguing at least.

To be sure, it's been a lousy year so far for most asset classes aside from oil and commodities.

But the most interest rate sensitive securities, or long "duration" plays, have been under the cosh. Government bonds have lost 5-6% while U.S. technology stocks are down more than 10% - and fund managers are heavily underweight in both, with a overweight bias for global equities and cash.

Mutual fund data shows two consecutive months of outflows from global bond funds - a cumulative $32 billion exit for the year to date.

Spiking oil prices, tensions over war in eastern Europe and central banks mapping a return to pre-pandemic monetary settings all stir the water for investors who are once again fearful of an end to the 40-year bond bull market.

But JPMorgan's long-term strategists take a different tack and screen out all the turbulent news, macro forecasts and tactical trading views to model how mixed portfolios would perform a 10-year view based on past performance.

Jan Loeys and team this week updated their