It increasingly looks like Jay Powell rang the bell at the top of the bond market. In mid-September, the US Federal Reserve that he chairs delivered two things that, on paper, should be good news for bonds: a supersized interest rate cut and a strong hint of more cuts to come. But this market, which underpins every other asset class on the planet, has sagged from that day on.
Yields on benchmark 10-year US government bonds have picked right back up to over 4 per cent — the flip side of sliding prices. About 40 per cent of the rally in 2024 has gone up in smoke, said Steven Major at HSBC, one of the big banks’ more keenly watched bond analysts.
“That was quite some move,” he said. “In the space of a few weeks, bonds gave back a significant proportion of the gains of the previous six months.”