Analysts marked an accelerating decline in bond markets, bringing bad news for fixed income investors in an already difficult market environment.
Global bonds have lost a fifth of their value so far in 2022, with the fresh surge on US government bond yields on the back of US Fed chair Jerome Powell’s hawkish stance at the Jackson Hole convention adding to investor concerns.
Across the Atlantic, bonds in several European nations saw their worst monthly performance in decades last month, sparking a move in the Bloomberg Aggregate Bond index down approximately 20% from its peak for the first time in history.
Bonds are recognised as an asset class for typically reliable returns, making the 20% decline a sharp surprise for analysts and signalling a entry into a bear market.
Investors are speculating the weakness in bonds will persist as central banks tighten monetary policy in the fight against surging inflation in the US and internationally.
Experts expect the US Federal Reserve to hike interest rates by an additional 0.5% to 0.75%, following Powell’s hawkish remarks at the Jackson Hole conference in late August.
