Bonds: How $17 Billion Disappeared Overnight (Safe? Think Again)

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Are Bonds Safe? Only If You Respect What They Actually Are

A bond is safe from the risk it is advertised for — a high-quality government bond will repay you — but it carries two risks the word 'safe' hides. Duration: a bond with a 7-year duration falls about 7% for every 1-point rise in rates. And the credit spread: in mid-2026, investment-grade spreads were near 77 basis points, close to the tightest in 25 years against a long-run average around 150, meaning you are taking corporate default risk while barely being paid for it. The Credit Suisse AT1 wipeout proved the third lesson: your priority in the queue is only as strong as the exact legal wording sitting on top of the contract.

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