Brutal first half puts bonds in line for worst year in decades



* U.S. Treasuries down 11%, set for worst year since at least 1973

* Euro zone govt, corporate bonds also see double-digit losses

* Most of Treasury sell-off likely over, but outlook hard to read

By Yoruk Bahceli

June 30 (Reuters) - If dramatic losses seen in the first half of 2022 are maintained over the coming months, U.S. and European government bond markets are set for their worst year in decades in another sign the long bond bull-run may be over.

Central banks, after dismissing high inflation as transitory until late 2021, have switched to panic mode, cranking up the speed of policy tightening to stamp out galloping price growth.

U.S. Treasuries, the global fixed income benchmark, have delivered total year-to-date losses of 11%, setting them on course for the worst year on record, according to an ICE BofA index tracking seven- to 10-year Treasuries since 1973.

That also marks the worst first half performance since 1788, Deutsche Bank estimates.

German bonds are down 12.5% and overall euro zone government bonds 13%, seven- to 10-year ICE BofA indexes going back to 1986 show.

"(The bond sell-off) has been completely driven by the shift in central banks' policy and in their rhetoric," said Camille de Courcel, BNP Paribas's head of strategy for G10 rates in Europe.

Bonds of top-rated U.S. and European companies are also deep in the red, down 14% and 12.5% respectively, their biggest losses on record going back to 1997.

Their "junk" peers - rated sub-investment grade - have endured their worst drop since 2008.

Those moves have blindsided analysts and investors, forcing them to revise forecasts repeatedly. While it's tricky to predict what happens next, most suggest the worst is over for U.S. Treasuries.

BofA and JPMorgan expect 10-year Treasury yields to rise to 3.50% by year-end from around 3.05% currently, following the year-to-date 155 bps surge.

Others, like Goldman Sachs and BNP Paribas, see yields closer to current levels, at 3.30% and 3.20% respectively. Even if inflation continues to surprise, BNP's Courcel reckons yields may not rise much further, "because at the same time, the market would price larger rate cuts down the line".

Money markets are already pricing in the Fed cutting rates next year. FEDWATCH .

Asset manager PIMCO also points out yields have reset at levels attractive to long-term investors, and notes the risk that the U.S. Federal Reserve could ignite a recession.

The German outlook is harder to read. The European Central Bank is yet to start raising rates and policy guidance has been far less clear.

BofA expects 10-year Bund yields to end 2022 around current levels, at 1.45%, while JPMorgan, citing the eventual impact of ECB tightening and the fragility of the euro area, expects a fall around 50 bps to 1%.

Goldman Sachs on the other hand expects a rise to 2%, noting that a planned anti-fragmentation tool would allow the ECB to hike rates higher than otherwise and ease the safety premium on Bunds.

For some, even recession prospects won't make bonds attractive.

Alex Brazier, deputy head of the BlackRock Investment Institute, expects policymakers to ultimately cave in and salvage economic growth even before inflation, stemming from production constraints and supply squeezes, is tamed.

Bond yields will rise in coming months as central banks tighten policy, says Brazier, a former member of the Bank of England's financial policy committee.

"But it is possible markets are yet to price the persistence of inflation if the Fed changes course," he said, noting either situation meant a poor outlook for bonds.



10-year bond yields Link
U.S. Treasury returns Link



Reporting by Yoruk Bahceli, additional reporting and editing
by Sujata Rao and Alex Richardson

免責聲明: XM Group提供線上交易平台的登入和執行服務,允許個人查看和/或使用網站所提供的內容,但不進行任何更改或擴展其服務和訪問權限,並受以下條款與條例約束:(i)條款與條例;(ii)風險提示;(iii)完全免責聲明。網站內部所提供的所有資訊,僅限於一般資訊用途。請注意,我們所有的線上交易平台內容並不構成,也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。

所有缐上交易平台所發佈的資料,僅適用於教育/資訊類用途,不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議,或是交易價格紀錄,或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。

本網站的所有XM和第三方所提供的内容,包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接,皆爲‘按原狀’,並作爲一般市場評論所提供,而非投資建議。請理解和接受,所有被歸類為投資研究範圍的相關内容,並非爲了促進投資研究獨立性,而根據法律要求所編寫,而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊,相關詳情請點擊 這裡查看。

我們運用 cookies 提供您最佳之網頁使用經驗。更改您的cookie 設定跟詳情。

風險提示:您的資金存在風險。槓桿商品並不適合所有客戶。請詳細閱讀我們的風險聲明