Bond yields are jumping at US Fed phantom shadows
The fixed-income market has become too bearish, too quickly
IT’S LIKE 2022 all over again, with 10-year US Treasury yields approaching 4 per cent, equity markets struggling and the US dollar strengthening.
But now is not the time to abandon all hope and jettison fixed-income positions. Instead, investors should be contemplating where to add to their bond holdings, not reduce them.
Other bond markets are hostage to the shifts in Treasuries, where yields are being driven higher as the market anticipates the US Federal Reserve will continue to tighten aggressively. Shorter maturities are leading the way, with the two-year US yield back up to the November peak of 4.7 per cent and close to its highest since the global financial crisis.
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