Yield jumps, price slumps by Damien Wood, principal Spectrum Asset
Global bond yields jumped in recent weeks. Neither Australian bonds nor equities were immune. Both were sold off sharply in just a few trading sessions. Despite this, global bond yields remain near or at historically low levels. Should they again regress towards historical norms, both equities and bond will once more be vulnerable to sharp sell-offs. Investors wanting to shield themselves from these sell-offs should consider putting part of their portfolios in floating rate notes. Not only should rising bond curves have little impact on their prices, it should also push up the future income stream from these investments.