Brian Raven: "The bond markets may create the biggest financial crisis of our lifetime:

Wealth manager warns on bond markets creating the 'biggest financial crisis of our lifetime'.

Brian Raven, group chief executive at Tavistock Investments, believes that bond markets will be the source of the problem and are primed for a sharp reversal.

With central banks preparing to put an end to ultra-loose monetary stimulus, and with inflation recently seeing a pickup, there are concerns that bonds could lose value quickly in a market that is not very liquid.

The CEO of a U.K.-based wealth management firm has warned that an unruly end to monetary stimulus from global central banks could lead to pensioners and retail customers suffering the biggest financial crisis of their lifetimes.

"This is the biggest financial crisis of our lifetime, because it affects the average person," Raven told. Tavistock is focused on the U.K. but Raven said the problem could be felt more broadly around the world. He argued that bond markets are in a state "never seen before" which could soon trigger a financial shock bigger than in 2008.

The more conservative central banks that have been skeptical of quantitative easing have long warned that long periods of low interest rates can sow the seeds of the next crisis.

While there's been many gloomy forecasts for the bond market, not everyone agrees that they'll definitely see significant losses as central banks reduce their bond-buying programs. Mike Bell, a global market strategist at JPMorgan Asset Management, told that this monetary tightening creates a risk but believes that the recent economic recovery should be enough to offset the impacts of lower bond prices.

Eventually tighter monetary policy could tip the U.S. economy into recession, but we believe that the economy and equity markets can withstand at least the next year's worth of monetary policy tightening," he said.

Source: Bloomberg Pro Terminal
Trader-G.Bozhidarov

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