Report: Bonds Not Bond-y Enough Anymore

So that's upsetting.

Not what this guy signed up for.

If the Fed ever does raise interest rates—you know, like the Wall Street Journal was clearly expecting the central bank to last week when it scheduled the first of new series of articles on the bond market—bad things could happen to said bond market, which just isn’t the safe-haven it used to be, because the prols and plebs are investing in it now.

Dollar credit to nonbank borrowers outside the U.S. hit $9.6 trillion this spring, the BIS said, up 50% from 2009. Repaying those loans and bonds will become costlier in local-currency terms should the dollar rise, as it often does, when the Fed goes ahead with tightening, potentially stressing large borrowers such as emerging-market companies.

Domestically, the rise of large bond funds has created new risks. As the funds have grown, so has cross-ownership of the same bonds, increasing the likelihood of contagion if one manager starts selling, the International Monetary Fund says….

Events like the 2013 “taper tantrum” and the “flash crash” in the U.S. Treasury market last Oct. 15 underscore the sense among many analysts and traders that the bond market is alarmingly fragile and increasingly subject to volatility more commonly associated with stocks and commodities.

The New Bond Market: Bigger, Riskier and More Fragile Than Ever [WSJ]