Why Bonds Are Unloved by the Media

by: Felix Salmon

Dear John Thain pleads with the financial media to stop with the stock-market obsession, already:

The S&P 500 represents about $13 trillion (slightly lower, as of this posting). The bond market, though, is over $27 trillion dollars (a statistic from 2006). Now, while the stock and pure interest rates sometimes move in correlated directions, the credit markets or mortgage market can be experiencing a very different directional movement. As recent history has shown us, fixed income markets can be more important to consumers and the economy over a period of days, months, or even longer. So, then, why don't media organizations describe the financial world based on how fixed income instruments perform?

All I can say to this are the immortal words of Westley to Inigo Montoya: "Get used to disappointment". There are some very good reasons why the financial media will never follow the bond markets with anything like the avidity they display with respect to the stock markets:

  1. Bonds are boring, stocks are exciting.
  2. The minute you say the words "credit spread", an enormous proportion of your audience has no idea what you're talking about. Hell, the minute you say the word "bond" you're over the heads of a large number of people. The general public understands what stocks are, or at least they think they understand what stocks are and what drives them up and down. Bonds, which are all based on the idea that one person's liability is another person's asset, are much less comprehended.
  3. People don't consume financial media because they care about the economy, but rather because they care about their investments. Yes, buried in some pension fund somewhere, they might have significant fixed-income exposure. But the securities they care about, as investments, are all stocks. The financial media only really care about the economy, and recession, and those kind of things, insofar as they affect the stock market. And the same is true for credit spreads: if they affect stock prices, they're important. If they don't, they're not.
  4. (The big dirty secret.) Financial journalists, as a rule, neither understand nor care about credit markets, especially if they work in television. Some do; most don't. The fact is that journalists care about news, and bonds are very rarely newsworthy. So on the rare occurrence that bonds deserve to be covered (like now), they're not.

I'm sure you can come up with more reasons, on top of these. But what's clear is that bonds are never going to get the column inches they deserve, especially not in general-interest venues like TV news or a non-financial newspaper.