In bond trading, what does the word ‘secular’ signify? If I remember correctly the secular trend implied that mid-term bullets dominate bond markets. ANyway, why is it called ‘secular’?
secular trend means non-cyclical, big-picture, stuctural changes, not affected by short term business cycle. Eg retail sales follow cyclical trend, but the shift to online sales is a secular trend, etc. Auto sales follow cyclical trend, but the shift to SUVs is secular trend. In the bond market, cyclical trend is the short/medium term interest rate cycle which drives the economy and yields. Secular trends are longer term, big picture structural changes driving bonds - eg things like: impact of soverign wealth funds, impact of GDP growth path in BRIC countries, impact of changing pattern of official holdings of gold, impact of expansion of euro zone, impact of global warming/food prices, impact of aging Japan & western/northern Europe, 1-child policy in China, decline of communism & rise of capitalism, etc, etc. These are the types of big picture issues driving longer term capital market expectations for inflation, real rates, yields, etc
A secular trend is a long term directional trend, like growth in GDP. It is contrasted with cyclical or seasonal trends, which cycle up and down in periods that are longer than one year (cyclical) or less than one year (seasonal). I don’t know why it’s called secular. Maybe a religious trend is one that says “all this has happened before, and all this will happen again.” 