(Chicago)

Most people talk about retail investors’ effect on the stock market, especially when things get bad. But what is much less understood is their role in the bond market. Individual bond buyers are growing force in the bond market and are one of the major factors that has kept bond yields low. The proportion of the US population 65 or older has grown 40% since 2000 and is set to keep growing. Retirees typically buy more bonds as they near retirement, which should keep downward pressure on yields.

FINSUM: So admittedly this WSJ article we discuss absolutely supports the arguments we have been making to our readers for many months. We are not bearish on bonds, despite a lot of comments to the contrary, because there is such a big demographically-driven source of demand.