Bonds Head for Fifth Weekly Loss in Longest Decline Since 2013

Bonds around the world headed for a fifth weekly decline, the longest run of losses in almost two years, as investors stuck to bets for the Federal Reserve to increase interest rates and as oil prices advanced.

The debt-market retreat that started in Europe in April extended into May on concern rising crude costs will lead to faster inflation. While U.S. economic data have been mixed, the Fed will still raise borrowing costs this year or early in 2016, a Morgan Stanley index shows. Europe and Japan are both showing signs of growth.

“People are starting to count down to the U.S. rate increase,” Kazuaki Oh’e, a debt salesman at CIBC World Markets Japan Inc. in Tokyo. “The world economy is recovering. It seems likely money is going to shift from bonds to equities.”

The benchmark U.S. 10-year yield was little changed at 2.19 percent as of 11:18 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 2.125 percent note maturing in May 2025 was 99 14/32.

The Standard & Poor’s 500 Index set a record closing level Thursday. Crude oil has climbed 44 percent from this year’s low set in March.

Figures released this month on U.S. retail sales and industrial production for April were both less than economists predicted in a Bloomberg survey, while the increase in housing starts was more than double the projected level.

Gross domestic product in Europe rose 0.4 percent in the first quarter, while Japan’s grew 2.4 percent.

The five-week rout for the Bank of America Merrill Lynch Global Broad Market Index of bonds resulted in a 1.8 percent loss.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE