Clobbered Fed Rate Cut Bets Wipe Out Even Last Year’s Bond Gains

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Investors who expected an extension of last year’s global bond gains have been disappointed as expectations of higher US interest rates have wiped out the 4.2% return on global sovereign debt from 2023. A Bloomberg gauge for government debt has declined 4.7% since January, driven by investors now expecting under two Fed interest rate cuts this year. The selloff has room to run if Thursday’s Treasury auction is any guide, as a sale of 30-year US bonds received lackluster demand. Yields on benchmark 10-year US Treasuries eased two basis points to 4.57% on Friday, but stayed close to the five-month high touched in the last session. Some analysts believe the losses can extend further, with yields potentially climbing toward 5% or even higher in the US 10-year. However, others see reasons for bonds to recoup their losses, with UBS Global Wealth Management and TwentyFour Asset Management suggesting that Treasuries may rally when the Fed begins easing, and investors may be looking to buy on dips.

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https://finance.yahoo.com/news/clobbered-fed-rate-cut-bets-053139324.html