Now lately this entire process has been thrown into reverse. The three bears have returned home and Goldilocks has jumped out the window and fled into the forest. The primary cause of this reversal is central bank tightening. This already exists in the U.S. and is coming soon to the U.K. and the eurozone. Japan may be a few years behind the rest of the developed world but it is also working toward policy normalization.
The result is that yields on low-risk developed-economy government bonds suddenly look relatively attractive to institutional investors compared with the drawdowns and increased volatility of U.S. and EM stocks........The Great Unwind has begun.