Bonds Are Going Haywire Again — Howard Marks Explains Why

Bond yields are surging to multi-decade highs as persistent inflation, massive fiscal deficits, and intense capital demand reshape the economic landscape. Contrary to recent perceptions, today’s interest rates represent a return to historical norms rather than an anomaly, suggesting that the era of near-zero rates was the true aberration. Investors are increasingly wary of the $40 trillion U.S. national debt, though the timing of any fiscal reckoning remains elusive. Meanwhile, geopolitical friction between the U.S. and Iran continues to threaten global energy stability. The closure of the Strait of Hormuz and ongoing blockades keep crude prices elevated, exacerbating a "double whammy" of rising fuel and food costs that disproportionately impact vulnerable global populations. These structural pressures, combined with political uncertainty surrounding upcoming elections, create a volatile environment for both debt and equity markets.