2022–2023 Bond Turbulence — Reading the Vectors, Not the Noise
Updated Aug 18, 2025
Plenty of investors took the straight-line view: rates were rising, so bonds were untouchable—sell and don’t look back. Others reduced the entire drama to a binary wager on the Fed: will Powell hold the line or blink? Both lenses were tidy, and both missed what actually mattered.
The real story lived in the deeper currents—emotional, institutional, crowd-driven. The prevailing mood wasn’t outright fear; it was something subtler and more corrosive: frustration shading into fatigue. Conviction thinned out, but panic never fully ignited. Institutions faced a blunt-force tightening cycle—fast, heavy, arguably too much. Liquidity strain began to seep through the system, visible in the hairline cracks, but not dramatic enough to force an immediate rescue.
Retail, scorched in 2022, wanted nothing to do with duration. Bonds were persona non grata in the brokerage accounts that once called them ballast. That wholesale aversion—an entire asset class written off—was precisely the dry powder contrarians look for. Meanwhile, the media tone drifted from alarm to resignation. Less breathless headlines, more weary shrugs. That shift from screaming to sighing is a tell; apathy often arrives just before a turn.
The outcome wasn’t a spotless pivot or a spectacular collapse. It was a slow inversion of psychology. Yields, especially on the long end, started to resist the script. Rate hikes didn’t “peak” because the Fed flinched; they peaked because the market’s emotional energy ran out of fuel. Bottoms are made that way: quietly, without fanfare or permission.
So no, this period can’t be reduced to “bad news, sell” or “good news, buy.” That playbook is relicware. What matters is where the emotional tide crests, where institutional pressures begin to bend, and where the crowd runs out of narrative. That inflection—where the vectors realign—is your signal. Not the headline. Not the press conference. Not even the yield chart in isolation. The vector is the message.
