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With yields at record lows and fear of inflation rising, bondholders have rarely looked this vulnerable 8 Mar 2021 Global bond markets have been in a bull market since the early 1980s. That marked the end of the last major inflationary period seen in developed markets. Most bonds pay a fixed income (“coupon”). So while rising inflation is bad (because it makes any fixed payment less attractive), falling inflation is very appealing (the “real” value of the fixed payment increases as inflation falls). This has been reflected in declining bond yields (and thus rising bond prices) for the past 40 years or so. However, the end of the pandemic might also mark an end to the bull market, as governments pump money into their economies to try to prop up the post-Covid-19 recovery and central banks resolve to ignore inflation in favour of full employment. Last week we looked at what sort of assets thrive in a more inflationary world. But what might happen to bondholders? ....