BND: Bonds Are Rising Again, But They Face 2 Key Risks

Harrison Schwartz
09-14

Summary

  • BND's short-term outlook is positive due to lower inflation expectations and a potential end to or reduction in QT activity.
  • Key bond risks include potential oil price spikes from geopolitical tensions and rising corporate credit risk during stock market crashes.
  • In the long term, BND is not ideal due to concerns about US government debt, which makes its debt unpayable without chronically elevated inflation.
  • I expect a repeat of 2020-2022 when inflation declined in the short term but was eventually pushed to a new high as the Federal Reserve overstimulated.
  • Speculators may take advantage of BND's current rally, but may not want to hold the ETF for too long.

NoDerog/E+ via Getty Images

The medium and long-term bond markets have reacted well to economic data indicating a slowdown. I've covered the popular bond ETF (NASDAQ:BND) for years, with a bearish outlook from 2020 onward, as I believed excessive government

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