Bond markets set for a taste of the 60s as inflation picks up

(RECAP: Paul Schmelzing, a visiting scholar at the Bank of England from Harvard University, has studied 800 years of bond markets history and says the most relevant parallel with today’s environment is with the late 1960s under U.S. President Richard Nixon. The U.S. was emerging from a prolonged period of low inflation, the jobs market was tightening and a new pro-business president had raised expectations of fiscal expansion. It was a bruising time for bond investors. U.S. bonds lost 36 percent in real price terms between 1965 and 1970, while annual consumer price inflation more than tripled in the period, to 5.9 percent from 1.6 percent. As the world’s biggest bond market, what happens to U.S. Treasuries usually sets the tone for bonds across the world. Based on historical standards, bonds could be set for double-digit losses, he said.)