Robust Bond Gains Mask Risk of Market Pain Ahead
- High-grade total return for January-March is best since 2019
- Tighter financial conditions are growing risk to debt market
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The year of the bond is in danger of hitting a wall.
Global credit markets just wrapped up their second consecutive quarterly win as buyers piled in, betting that the US could tame inflation while also avoiding a hard landing. The best first-quarter gains since 2019 follow the worst year ever for high-grade bonds, and the rest of 2023 looks increasingly challenging.