After the first two consecutive down months for the Bloomberg Barclays Global Aggregate Index this year, the debate about whether the $120 trillion global bond market is entering a bear market is heating up once again. But as usual when it comes to fixed-income assets, the discussion isn’t as simple as whether investors are in for a prolonged period of falling bond prices and higher yields. That’s already happening in some parts of the world.
Instead, the next bear market in bonds is likely to be characterized by a slow grind to very low returns rather than a sudden sell-off. The place to start when assessing what’s ahead for the bond market is global forward rates, which basically provide a sense of where debt investors expect yields to land at some point in the future.
