James Carville, a political adviser to President Bill Clinton, famously said: "I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody".

If you follow financial news, you probably saw a lot of headlines about the bond market these last weeks. If you follow financial YouTube channels, you probably noticed some videos explaining what the heck the bond market actually is, and why it matters. But I think that most of these sources go into too much detail, and then forget to tell you the most important and most fundamental fact about the bond market:

The bond market is extremely hard to manipulate, and is therefore likely to give a pretty accurate economic signal. If, as right now, the signal from the bond market is that interest rates on government bonds are rising to historic heights around the world, the worrying thing is that it is A) a very bad signal for the future of the world economy and global governments, and B) highly likely to be correct. If you don't own bonds, and don't have a lot of debt, you might be able to ignore the bond market itself. But you need to consider the possibility that the bond market is sending a rather accurate signal that bad times are coming.

- posted by Tobold @ 12:46 PM Permanent Link