This is the most-important chart in the world.
When you watch TV, it's all about the annual losses in stock markets but there's far more money in global bonds and this year wasn't just a bad year, it was the worst in living memory.
Bonds puked in 2022 to end a 40-year cycle of falling rates that started in the early 1980s.
Where this chart goes in 2023 and beyond is the single biggest driver of global markets. So far the high was 4.33% and you could argue that 4% has been rejected but it will surely be tested again.
Down the curve, the 2-year yield rose 370 basis points this year, which is the largest since regular issuance of 2s in 1973.
I've long called bonds the biggest bubble in world history and it's bursting before our eyes. The surprise to me in 2022 is that the implosion in bonds hasn't led to any kind of contagion, aside from a short-lived problem in a UK pension product.
But the pain is percolating and whether it's housing, corporate balance sheets, private equity, banks or something else, a storm is brewing.
