Global bond prices have risen on the 19th. The escape to quality has progressed from the view that the probability of a US recession has increased.
Australia’s 10-year bond yield fell 13 basis points (bp, 1bp = 0.01%) to 3.33%. It followed the decline in US Treasury yields in US time. Yields on 10-year Treasuries fell by about 10bp to 2.88%. The S & P 500 Index is down 4%, the rate of decline since June 2020.
“The increased risk of a slowdown has made duration more important as a portfolio hedge,” said Mark Lindbloom, portfolio manager at Western Asset Management. “Bonds have regained their attractiveness compared to other asset classes,” he said, following the sharp rise in US Treasury yields so far this year.
As the US Federal Reserve focuses on curbing inflation through rate hikes, bond managers have increased their long-term bond holdings to take advantage of the flattened yield curve. There is also the meaning of hedging against a further decline in risk assets.
Yields on US 2-year bonds, which are sensitive to policy rates, fell by only 3bp, further narrowing the long-short interest rate differential. The yield gap between 5-year and 10-year bonds has fallen below zero again.
news-rsf-original-reference paywall">Original title:
news-rsf-original-reference paywall">Global Bonds Switch to Rally Mode as Recession Fears Intensify（抜粋）