An unhealthy concoction of factors are creating a classically late-cycle feel in the markets. In a challenging time for bond managers, Janus Henderson’s John Pattullo, co-head of strategic fixed income, simplifies the conundrums and shares his views.

Key points:

• While secular trends have remained entrenched, the past two years have been characterised by a reflation trade, primarily driven by China reflating the world in 2015-16
• There is a divergence in equity markets — US growth equities versus European value
• There is a clear contradiction in the narratives from the bond and equity markets
• John believes the technical breakout in yields is more of a false dawn
• John also believes the unhealthy concoction of factors will prove to be a buying opportunity for bonds in a few months’ time