Bond Markets Are ‘Almost Taunting the Fed’ With Global Rate-Cut Bets
- Aggregate sovereign yields have sunk to pre-Trump levels
- Echoes of ‘bond market vigilante-ism,’ Weeden’s Purves says
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Bond markets around the globe are acting like central-bank rate cuts are only a rubber-stamp away from becoming a reality.
Just look at the size and scope of the recent rally, which has dragged down yields across the curve. For example, the aggregate rate on longer-maturity sovereign debt ended last week at 1.18%, a level last seen two weeks before Donald Trump was elected U.S. president, according to a Bloomberg Barclays index of securities issued by major economies including the U.S., Germany and U.K. That’s despite repeated assurance from Federal Reserve policy makers that they will be “patient” in making their next move.