Bonds are being made. “Funny moment,” Bloomberg reported.
First note: the trend is not the same as WallStreetBets and the note stock frenzy. The r/bonds subreddit forum has only 8,000 members, not 13 million. But the fact that ordinary people are discussing bonds is still an important development for an asset class that doesn’t see much enthusiasm from retail investors or anyone else.
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At their core, bonds are IOUs from governments or companies – except that these IOUs are not tradable (the BBC has a good Econ 101 explainer on the topic.) But for simplicity let’s say a bond is debt. And debt is boring, right?
Well, for most people, earning money is never boring. With inflation high and stock markets volatile, this means looking for new sources of production and diversification. We have already seen how this has created a tailwind from alternative assets to discretionary investments.
Bonds aren’t exactly alts – the once golden 60/40 portfolio rule to recommend owning 60% stocks and 40% bonds. But it’s fair to say that fixed-income offerings like bonds are enjoying renewed interest, with Goldman Sachs suggesting earlier this month that “it’s time to switch from stocks to bonds.”
