The global bond market is suffering its worst start to a year since 2015 as investors grow increasingly confident that the rollout of Covid-19 vaccines will boost economic growth and fan serious inflationary pressures for the first time in decades.
The Bloomberg Barclays Multiverse index tracking $70tn worth of debt has lost 1.9 per cent since the end of last year, in total return terms that account for price changes and interest payments. If sustained this would be the worst quarterly performance since mid-2018 and the sharpest first-quarter setback for the broad fixed income gauge in six years.
The bond market reversal started gathering steam in January, when the Democrats won control of the US Senate and raised the prospect of a more forceful stimulus package to heal the damage caused by the coronavirus pandemic. But the sell-off has accelerated and broadened markedly in recent weeks.