Though nearly all commentators seem to be agreed that the current credit market is nearing the top of its cycle, there is no real consensus as to what happens next.  Restricting quantitative easing on both sides of the Atlantic has created unknowns, since QE in itself placed the market in uncharted waters.  

With some historically quirky macro factors at play around the globe, such as a combination of low unemployment, productivity and low inflation, predicting if or when an inflection point will be reached is leading to some quite topical analysis - none more so than Paul Schmelzing of the Bank of England's recent report, 'Eight centuries of the risk-free rate: bond market reversals from the Venetians to the VaR shock' - which draws data from over 800 years to show similarities and discrepancies with the current environment.

Two points in the report might especially resonate with institutional investors:  Firstly, the potential impact of forced selling by the very same buyers who purchase bonds to protect themselves as yields rise, such as insurance companies or pension schemes; secondly, a question mark over the contemporary banking industry's ability to provide liquidity to the market in times of stress - due to the impact of prudential regulation.  The author points out that these new market parameters coincide with similar wage/inflation numbers in the US to those experienced ahead of the 1967-70 bond market reversal, a time when investors also held a long term view of low rates and inflation.  As saying goes, those that ignore history...