Bond Yields, Supply Cause the $400B Market Mismatch

The video discusses the high demand for bonds, which has surpassed supply multiple times in recent years, leading to persistently low yields. Despite discussions about the Fed raising interest rates and the end of quantitative easing, bond yields remain low due to high demand and limited supply. Concerns about liquidity arise if many investors try to exit simultaneously. Central banks like the ECB, Bank of Japan, and People's Bank of China play a significant role in maintaining demand.

What has been the trend in bond demand compared to issuance over the past seven years?

• Demand has been lower than issuance.

• Demand has matched issuance.

• Demand has surpassed issuance.

• Issuance has been five times higher than demand.

What is a potential risk if many investors try to exit the bond market at once?

• There will be no impact on the market.

• Bond prices will increase.

• Yields will decrease.

• Prices may collapse, pushing yields higher.

Which central banks are mentioned as potential buyers to absorb bond demand?

• Reserve Bank of India and Bank of Canada

• Federal Reserve and Bank of England

• Swiss National Bank and Reserve Bank of Australia

• ECB, Bank of Japan, and People's Bank of China