Bonds Become ‘Really Difficult to Trade’ as Correlations Unwind

AlphaSimplex’s Kathryn Kaminski says bond traders are seeing fixed-income pricing increasingly driven by geopolitical risk and inflation, rather than traditional indicators like US economic growth. This shift is creating “confusion” about the usual duration/rates signaling framework, implying a higher risk of volatility in rates and credit spreads. The impact is likely more selective than market-wide, but it can move trading expectations for bond benchmarks.

Analysis

AlphaSimplex’s Kathryn Kaminski says bond traders are seeing fixed-income pricing increasingly driven by geopolitical risk and inflation, rather than traditional indicators like US economic growth. This shift is creating “confusion” about the usual duration/rates signaling framework, implying a higher risk of volatility in rates and credit spreads. The impact is likely more selective than market-wide, but it can move trading expectations for bond benchmarks.