Global bond index tumbles toward bear market on Powell pushback - BNN Bloomberg

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Bonds are sliding toward the first bear market in a generation, burning investors who erred in bets that central banks would pivot away from rapid interest-rate hikes.

The Bloomberg Global Aggregate Index, which tracks total returns from investment-grade government and corporate bonds, is within a percentage point of falling 20 per cent from its peak after another bout of selling following the Federal Reserve’s Jackson Hole symposium.

It’s a particularly difficult environment for investors, with bonds and stocks sinking in tandem this year. MSCI Inc.’s index of global equities has lost 16 per cent so far this year on a total return basis. The Bloomberg bond gauge lost 19.3 per cent as of Monday from its record high in January 2021.

UK and German two-year yields -- the most sensitive to changes in monetary policy -- are poised to rise by the most on record this month as traders bet the Bank of England and European Central Bank will continue to raise borrowing costs in order to quell inflationary pressures. Corporate bond spreads globally are also widening after the summer rally, and were higher again at the start of the week, a Bloomberg index shows. They have climbed for two straight weeks, the data show.

The lowest August for dollar bond deal sales from Asia in a decade continued on Tuesday, as issuers kept to the sidelines amid rising borrowing costs in the US currency Vietnam will tighten rules on bond issuance by property companies to curb speculation and rein in high real-estate prices it says are a threat to the nation’s financial market

 

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