Government Bonds

While central banks remain committed to battling inflation with big rate hikes, George Curtis detects a clear change in tone which has seen market expectations of terminal rates tumble in recent days.

With central banks speeding through their hiking cycles, a return to rates stability (elusive thus far) could allow investors to reap the rewards of bond yields that are unusually high for this point in the cycle.

With UK banks pulling mortgages from the market, Douglas Charleston explains why this doesn’t reflect any fundamental weakness in the UK banking sector, but rather the uncertainty created by the sharp moves in UK rates.

With the UK’s mini-Budget sending its currency and bonds into freefall, Gordon Shannon says both the government and the Bank of England need to learn the importance of communication with the markets.

With reaction to the UK’s mini-budget roiling markets for a second day, Felipe Villarroel looks at what higher rates and a weaker currency mean for the UK economy.

With the Bank of England doling out a double dose of doom on UK inflation and growth on Thursday, Eoin Walsh says it is refreshing for investors to get such a candid assessment from a central bank.

After H1 2022 broke market records for all the wrong reasons, Gary Kirk says fixed income outflows could reverse quickly if investors see evidence that central banks are turning the tide on inflation.

With Fed rate hikes continuing and the economy progressing into late cycle stages, Mark Holman presents his expectations from the Fed going into the second half of the year and explains why he believes Treasuries can provide the protection investors may need.

For all of these observations, there is one common observation – yields did not stay at these high levels for very long.

The broad-based sell-off that has faced investors since the start of this year has been all the more painful because of the breakdown in traditional correlations, which has put conventional hiding places out of reach.

Since the end of last year, central bank officials have been falling over themselves to increase their hawkishness around rates, particularly in the US. Even the ECB Governing Council members have been vocal of late.

With inflation running at 40-year highs in many parts of the world, it is easy to get carried away with making comparisons to the dark economic days of the early 1980s.