What it's like to work in the bond market these days

​After the Federal Reserve hiked interest rates on Wednesday, the 10-year Treasury yield climbed back to 5%, the highest it has been since 2007.

Between oil prices, war, inflation, and a tight-lipped Fed, the bond market is as hectic as ever. So, while the people working the stock market usually get all the headlines, it’s now time to shine for the people in or adjacent to the bond market.

“Certainly, it’s nice to be one of the first calls rather than the second round,” said Marvin Loh, senior global macro strategist at State Street.

There are $161 trillion worth of bonds in the world — more than the value of all the stocks.

“It’s the bond market that drives everything,” Loh said.

They touch everything from mortgages to stocks.

But one of the many things that drives the bond market is the Federal Reserve — and under Chair Kevin Warsh, the Fed has stopped telling the bond market what it’s thinking as much.

Vinny Bleau, a fixed income analyst at Raymond James — which is a Marketplace underwriter — said he’s fine with a quiet Fed.

“Clients are going to come to us and want to know what we think,” he said. “It really opens up an opportunity for us to fill that void that the Fed may not be filling as much as they used to.”

Still, the spotlight is not always kind.

“Up until, I would say, call it six weeks ago, everything was going quite swimmingly,” said Andrew Clinton, CEO of Clinton Investment Management, which does a lot with municipal bonds. “It was a good year for fixed income in general and municipal bonds in particular.”

And then oil prices went up, market interest rates started to go up, and bond prices went down.

“The reversal and the meaningful rise in interest rates over the last month and a half to two months has been, to put it plainly, unwelcome and something that has upset clients,” Clinton said.

Nobody likes to see the value of something they bought go down. Clinton and other advisors are spending a lot of time reminding people that they’re still getting interest from their bonds, and they’ll still get paid back, and they don’t need to freak out.

“They’re always concerned about, ‘oh my god, I’m losing price appreciation,’” he said. “And you are, but the income that you’re going to earn is going to well exceed that loss.”

It’s hard for a lot of people in the current economy.

“And I think it’s just difficult for fixed-income investors — particularly now, given the level of uncertainty — to not look past a very short term,” said Leslie Falconio, head of taxable fixed income strategy at UBS.