Fiscal concerns and worries over a prolonged period of elevated interest rates sent government bonds tumbling in the third quarter, and some investors believe more weakness is in store. U.S. and German government bond yields were set to end September with their biggest quarterly rises in a year, disappointing fund managers who were hoping for relief from the historic losses bonds suffered in 2022, when the U.S. Federal Reserve and other central banks raised interest rates to contain surging inflation. While bond yields - which move inversely to prices - appeared to be topping out earlier this year, renewed hawkishness from central banks has sent them soaring again in recent weeks.
FILE PHOTO: Jordanian Dinar, Yuan, Dollar, Canadian Dollar, Pound and Riyals banknotes are seen in this picture illustration - Fiscal concerns and worries over a prolonged period of elevated interest rates sent government bonds tumbling in the third quarter, and some investors believe more weakness is in store.
The jump in yields is hurting equities, which are set for their first quarterly drop this year in the U.S. and Europe. With U.S. Treasury yields leading the rise, global currencies are reeling as the U.S. dollar rallies. Similarly, investors have pushed back expectations of European Central Bank rate cuts as policymakers have stuck to their message to keep rates high for longer. Money markets pricing suggests traders see the ECB's deposit rate is seen at around 3.5% by the end of 2024, up from around 3.25% at end-August.
As a result, “yields will rise until investors believe that longer-dated bonds are compensating them for the supply that we know is coming,” said Mike Riddell, senior portfolio manager at Allianz Global Investors.
Philippines Latest News, Philippines Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Analysis-Harsh reality of 'higher-for-longer' rates looms over US stocksAs the Federal Reserve’s hawkish stance boosts Treasury yields and slams stocks, some investors are preparing for more pain ahead. For most of the year, equity investors brushed off a rise in Treasury yields as a by-product of better-than-expected economic growth, despite worries that yields could eventually weigh on stocks if they rose too high. Those concerns may be taking on fresh urgency after the Fed last week forecast it would leave rates elevated for longer than many investors were expecting.
Read more »
Analysis-Harsh reality of 'higher-for-longer' rates looms over US stocksBy Lewis Krauskopf, David Randall and Carolina Mandl NEW YORK (Reuters) - As the Federal Reserve’s hawkish stance boosts Treasury yields and slams ...
Read more »
German inflation likely to ease in September, key states indicateMarket News
Read more »
German Inflation Sinks to Lowest Level Since Before Ukraine WarGerman inflation plunged to its lowest level in two years after the effect of heavily discounted public transport last summer disappeared from the comparison.
Read more »
Fashion Show Analysis: How to Read a Fashion RunwayAfter decades of fashion show analysis and deciphering designer looks, Bernadette Morra on how to make sense of what comes down the runway.
Read more »