Michael Green
speaker
318 appearances
3 recordings
1 series
first heard Dec 2025
last heard today
Michael Green’s voice in public audio — every appearance, attributed to the second.
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Appearances
Prof G Markets · Wall Street Veteran: The Bond Sell-Off Is A Buying Opportunity · 29 Sep 2026
podcast
Well, unfortunately, I think what it is telling us is the mechanical properties, as you've heard me emphasize in prior discussions around passive investing, are now playing out in the bond markets.
And this is particularly problematic because the bond indices that passive vehicles reference was never designed as an investable product.
It was not designed to represent a specific risk, which would be appropriate for investment.
Instead, it was designed to represent
pure representation.
What is the total quantity of bonds outstanding?
That means, unfortunately, that there's very little thought that's actually going into this bond sell-off.
There's lots of narratives that exist around it, that the United States is running unsustainable deficits, or that France is running unsustainable deficits, or that debt to GDP is higher than it has been, and that somehow or another explains the sell-off that we're seeing.
Unfortunately, that isn't borne out by the facts.
If we look at a country like Australia, which has a low debt to GDP, it's experiencing the same sell-off.
You look at countries like Switzerland, which are also running deficits, they're experiencing very different behavior in their bonds, as is China, which is now part of Western bond index markets.
What we are really seeing, unfortunately, is the mechanical byproduct of an investment strategy that says a bond that is trading below par is significantly less attractive in terms of incremental capital allocation as a bond trading above par, even if they're from the exact same issuer.
And so there's no difference in credit risk.
or anything else, it's simply a function of how we've decided to build the indices that is creating most of the behavior that we are seeing at this point.
It's analogous to the nonsense that occurred around the dot-com cycle when a similarly improperly constructed equity index brought to light the distortive impacts of passive investing at much lower levels of passive penetration than we are seeing now in the equity markets where my work is well known.
In the bond markets, this is not thought.
This is not investment opportunity.
This is a mechanical feature of how we've structured the markets.
And ultimately, we will have to address it.
I do disagree with that.
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