According to HSBC Holdings head of fixed-income research Steven Major, bond investors shouldn’t be particularly worried about the Brexit or about the possibility of a Donald Trump presidency. But they should be worried.

Major believes the Brexit vote is simply the latest event in a story decades in the making that will result in a prolonged period of low and negative interest rates around the world.

“It looks to me like everyone is going to end up converging on a similar view: The Fed can’t do much,” Major said. “I’m already there. It’s more of a structural story and the Fed for international and structural reasons can’t hike.”

Prior to the Brexit vote, the futures market was predicting roughly a 50 percent chance of another Fed rate hike by the end of 2016. Since the vote, that percentage has fallen to only 15 percent.

Major said…

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