Wow that is a question. Long dated, short dated, local currency..index linked..etc There are also other types of credit

Check the "Duration" of any bond or bond fund. That measures the sensitivity of the capital value to a 1% move in interest rates the Vanguard U.K. Government Bond Index Fund - Accumulation has a duration of 13.7 Years. That means a 1% rise/fall in interest rates will move the capital value by 13.7 %

Interesting view on bonds from a Liontrust Bond Fund manager on II this week. His view...be seriously underweight.

The price of bonds moves on the expectation of rate changes and then again when it actually happens.
US Bonds are priced for 4 x 0.25% rises next year but they are still a very poor deal....yielding minus 5 % real yield.

The short maturity bonds that will be repaid soon 1-2 years aren't massively impacted by rate changes, 10-30 are. Short bonds are a "flight to safety play" it is somewhere to put cash but....I have never bothered.

If you really want bonds because you need them for some reason try a Strategic Bond Fund (I recommend using several equally weighted) they choose the credit risk, duration, currency etc and can go long/short.

What frequently happens....


When there's been a spate of selling, and a clearly visible acceleration of the selling, culminating in a very weak Friday US market close, private investors who've become progressively unnerved by this price action and the surrounding narrative spend the weekend ruminating. In the US, especially, the weekend financial TV channels at such times become full of doom merchants, extrapolating and catastrophising, darkening the private investors' mood even further...

A good chunk of these investors decide they've had enough and they feel compelled to "just do something", so they draw up plans to come out selling, and selling hard, on the Monday morning. They may rationalise their actions as considered and thoughtful, but the primary driver will be simple instinct as their amygdala takes control and essentially dictates their behaviour.

In these circumstances, it is commonplace to see an absolute wave of "capitulation selling" from US PIs following the US market open on the Monday morning (ie. 2.30pm UK).

US instis, meanwhile, don't tend to make their moves until the final hour of trading (8-9pm UK), and thus that's usually the more important time to be watching price action for clues as to what might lie ahead.


Having observed markets for decades, I've seen this pattern play out again and again and again. The question is always: was that wave of Monday morning PI capitulation selling the last one for the time being, such that a price low of at least near-term significance is made? It quite often is, and by Tuesday's close the mood can appear quite different, but obviously that's not always the case. There are no guarantees with markets, as we all hopefully know.

I would simply reiterate the point I made in my clickbait-titled thread yesterday: at times of market stress, stick to the sensible plan that you drew up in calmer times, and avoid making large unplanned portfolio changes that you've been induced into making solely by near-term price action that's unnerved you.

Sometimes, such unplanned portfolio changes may work in your favour, but if like most of us you are investing over the very long term (essentially, most of your adult life, eg. half a century) then like a gambler at the bookies, the more that you repeat suboptimal emotionally-driven behaviour, the greater the probability that it's the bookie who'll come out ahead, at your expense.

NB no advice, merely retelling what I have observed over many years of this. Good luck.

Bonds are a lot more complicated than equities, and there is no substitute for doing some research. E.g. I wouldn't currently touch 'risk-free' bonds, especially long-dated ones, with a barge-pole, but am happy holding my high yield junk bonds which are not really sensitive to interest rates and at worst ought to match inflation.

No one ever really knows the direction rates will take ..

So buy bonds based on their present value.

Right now, you can buy a 10 year US Treasury on a yield of 1.76% .. This is well below inflation, but if you hold it for 10 years, that's what you'd get each year .. Basically: terrible value – you'd be crazy to own them (Ray Dalio's words), at least as an investment.

It's obvious that there's going to be another wave of selling tomorrow but futures and ETFs will almost certainly reflect that in the morning. Any predictions (at least as far as the rates worries go) beyond Thursday that aren't based on inside information are pretty much hot air currently.