“Bond markets are under pressure now, but as yields rise, opportunities for investors to benefit from higher income are opening.”
Bond yields on the rise again
- Global bond yields have risen across all maturities, with longer-dated bonds reaching multi-year highs.
- A mix of factors is driving the rise: central bank policy uncertainty amid fears of sticky inflation, funding needs and a lack of fiscal discipline.
- A global and flexible approach can help investor adapt to a volatile economic and market landscape.
Global fixed income markets have seen significant moves in bond yields over the summer, particularly at the long end of the curve. In the US, 30-year Treasury yields reached the highest level in almost two decades, while 10-year yields climbed to levels not seen since before Trump returned to office. The rise in longer-maturity bond yields partly reflects the change in economic conditions, including stronger-than-expected real growth, supported by capex spending, and sticky inflation. But it also reflects the higher compensation required to hold longer-dated bonds as debt levels remain elevated and debt issuance among governments and businesses continues to increase.
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