Exchange traded funds that track bond markets have endured a torrid time this year as galloping inflation has forced central banks to raise interest rates aggressively, in an effort to restore price stability.
Investors have been warned to expect more increases in interest rates in the US, UK and EU as increased volatility in global energy and food prices — resulting from Russia’s war in Ukraine — creates greater uncertainty over the future path for inflation.
Meanwhile, widespread losses have been registered across some of the world’s most popular fixed income ETFs. Bond prices, which move inversely to interest rates, have dropped as central banks have signalled that tighter monetary policy will be necessary until policymakers are confident that inflation has been brought under control.