Bond Investors Disappointed by Economic Forecasts

Major geopolitical or financial surprises might reignite safe haven demand for fixed income, but macroeconomic currents continue to run against bonds

Peter Gee 26 June, 2018 | 9:01AM
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Bond investors continue to be challenged by the prospect of rising inflation and tighter monetary policy. The Bloomberg Barclays Global Aggregate index year to date is down 1.7% in U.S. dollars. Both investors in global government bonds and global corporate debt have lost ground as bond yields have risen and corporate credit spreads have widened.

As well as further tightening of monetary policy in the U.S., two other issues have contributed to the losses. Emerging market debt has been sold off as investors have become more aware of emerging market risk, sparked in particular by unpleasant surprises out of Argentina and Turkey, and the Bloomberg Barclays Emerging Markets Aggregate index is down 4% in U.S. dollars.

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About Author

Peter Gee  is a Fund Analyst for Morningstar Australia

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