Retirement anxiety, rate depression, populism…and what to do about it

With global interest rates remaining near all-time lows, and $15 trillion of debt providing investors a negative yield, bond-market bears are in danger of becoming extinct. But could today’s ageing society finally provide the trigger for a sustained bond-market selloff?

The life-cycle hypothesis in economics suggests that people save in middle age and then consume when they retire, as described by our economist James Carrick in his blog ‘The ant and the grasshopper’. This shift from saving to consumption suggests that the impact of an ageing population is inflationary, which should go hand in hand with rising yields. But does the evidence back the theory?