Volatile bond markets prompt asset managers to revise their risk models

London

WITH US$4.8 trillion in assets - or about the size of Japan's economy - no one manages more money than BlackRock Inc. So, it's worth paying attention when the firm says it's time to cast aside its trusted models for assessing risk in bonds.

The gyrations gripping the world's fixed income market are so great that it's almost impossible to make sense of them on a historical basis. In Germany, for example, yields on 10-year securities have surged from almost nothing in late April to about one per cent recently - a move so swift that some strategists are likening it to a once-in-a-generation event.

"The German bund market is incalculably volatile," said Scott Thiel, BlackRock's deputy chief investment officer for fund…