Investors and issuers vote with their feet in bond supply deluge

Any market participants hoping for a quiet few days to ease back into “work mode” after the summer break have had to rapidly adjust their expectations.

Given almost half of the world’s population resides in a country staging an election this year, 2024 was always likely to throw up a series of political headlines.

The start of the school year ordinarily also marks the end of summer for the primary bond markets as issuance restarts, though this year feels rather different.

In his headlining speech at the Jackson Hole Economic Symposium, Federal Reserve (Fed) chair Jerome Powell’s message to the market was clear.

It feels as though market news hasn’t taken a holiday so far this summer. From the US on Wednesday we got the minutes of the Federal Reserve’s (Fed) July 30-31 policy meeting, and revisions to a whole year of non-farm payrolls (NFP) data from the Bureau of Labour Statistics (BLS).

The title of this year’s Jackson Hole Economic Symposium – essentially a short holiday camp for the world’s economists and central bankers – is “Reassessing the effectiveness and transmission of monetary policy”, an important question given the remarkable resilience developed market economies have shown to the sharpest interest rate hiking cycle we have seen in four decades.

When the Bank of England (BoE) cut interest rates for the first time in four years earlier this month, we thought the move – made on a knife-edge 5-4 vote – had come a little too early.

Recent US Consumer Price Index (CPI) inflation data brought good news for investors and central banks.

Market attention in the government bond market has rapidly turned from central banks holding rates “higher for longer” to the potential for “lower and sooner".