SIMPLIFYING FACTORS THAT DRIVE BOND RETURNS

​We have written about how we believe there are essentially only two things you need to know when you buy or trade bonds – inflation and economic growth. We have explained the inflation proxy (oil + the Auzzy dollar) and the economic proxy – the S&P 500. Let’s now look at how these two factors affect returns individually and where we stand as of today in each case. We’ll start with the S&P. It is a reasonable assumption that if the economy is growing well then the S&P will be rising an...