Blog: Is the Bond Market Sending a Signal, or Noise?
Is the rise in bond yields a signal, or just noise?
With tariffs, AI and war continuing to dominate headlines, it's not surprising that market uncertainty is high, even if equity risk measures are low. So among market pundits there's been significant effort to distinguish between the deluge of misinformed opinions and what's actually going on. In a classic sense its an effort to separate the signal from the noise.
Unfortunately, most analysts focus on one type of noise, additive noise. But there is another type of noise called system noise. System noise is more consistent with behavioral issues, so I thought it would be useful to distinguish between these two. I addressed this from an analytical standpoint in Fractal Market Analysis for those interested in more of a deep dive.
But there is also the difference between a shock that's noise, and one that's truly a signal. And which are we seeing now from the bond market?