Call it an ordinary upset for markets, except for one big thing

Sebastian Evans, a fund manager at NAOS Asset Management, says there a lots of reasons why what's happening in government bonds is not that alarming for equity investors. Importantly, although sovereign yields are rising, high-yield debt and corporate bonds are not caught up in the panic. That means that businesses which borrow money in wholesale debt markets aren't facing a sudden increase in borrowing costs. Mr Evans thinks the Fed raising rates is a sensible thing to do, and shouldn't be a trigger for a market correction. "You feel better borrowing at a slightly higher rate, [it suggests] a bit more confidence. Raising rates is not the end of the world." As for the market's behaviour, "I think everyone jumps at shadows. At some stage the whole QE" - quantitative easing - "thing has to stop, and they're slowly trying to."

Read more: http://www.afr.com/markets/markets-ponder-future-for-bonds-as-week-of-volatility-poses-big-questions-20160916-grhmtm#ixzz4Kec10UX5  OR read here without an AFR login