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Bond Holders Look to Recession for Salvation After Vicious Half

  • Yields have pulled back as economic contraction risks increase
  • Data on jobs and wages will be focus in holiday-shortened week

Treasury holders reeling from the most brutal first half on record are starting to bet that a worsening economy will deliver some relief from the relentless selloff even as they brace for the risk of more weakness.

With the specter of recession looming bigger by the day, expectations for where US policy rates could ultimately go are being dialed back and some bond buyers are dipping their toes back into investments at these new, higher yields. But inflation is far from defeated and there’s trepidation that the first half rout -- which saw close to 14% wiped off global bond portfolios despite stocks also plunging -- could be extended even if growth stagnates.