Inflation Risks Start to Hit Pockets of Global Bond Market
- Long-dated company bonds have underperformed in recent months
- Some investors focus on shorter-end of the curve to lower risk
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Parts of bond markets around the world have started to signal that inflation risks will linger in the longer term, even as few expect prices to jump right away.
Unprecedented stimulus to cushion the global economy from the pandemic and signs that central bank independence is eroding worldwide have kept inflation concerns alive. That’s showing up as one factor in credit markets, where longer-dated bonds that are more sensitive to inflation expectations have lagged in recent months, reversing earlier outperformance.