Fixed income

Concerns that central-bank rate hikes may induce a recession are keeping investors guessing about the outlook for the economy as rising food and energy costs squeeze consumers, and volatility has picked up.

Yields have jumped so much this year, roughly doubling those on 10-year Treasuries, that it recalls past buying opportunities that paid off when the tide turned.

The yield jumped as much as three basis points to 3.11%, extending an advance that has seen the rate more than double this year.

Japanese institutional managers -- known for their legendary U.S. debt buying sprees in recent decades -- are now fueling the great bond selloff just as the Federal Reserve pares its $9 trillion balance sheet.

The Bloomberg Global Aggregate Index has fallen 11% from a high in January 2021. That’s the biggest decline from a peak in data stretching back to 1990.

The moves come after Powell struck a hawkish tone on Monday, prompting traders to rapidly ratchet up estimates for how aggressively the Fed will tighten monetary policy this year.

The repricing comes as Federal Reserve Governor Michelle Bowman suggested a hike of that magnitude could be on the table if inflation readings come in too high.

Treasuries led losses in global bond markets as inflation concerns, stoked by soaring oil prices, overshadowed any haven bids on the back of Russia-related tensions.

With minimal coupon protection, exceedingly long duration and super-tight credit spreads, the powder keg was fully loaded. Now we have sizzling inflation and hawkish central bankers providing us with the spark.

Government bonds worldwide are extending declines after the worst six months in five years, a Bloomberg index showed. Meanwhile, the pool of negative-yielding debt shrank to a six-year low.

Pension funding versus liabilities was close to 100% at the end of 2021, for the first time since the financial crisis, according to investment advisory firm Milliman.

U.S. Treasuries gained, bouncing back from an initial wave of selling after consumer-price inflation accelerated at the fastest annual pace in four decades in December.

The bond selloff that pushed 10-year Treasury yields to their highest in two years may not lead to a full-on taper tantrum, according to one of the biggest Treasury options market makers.

The rapid wage growth underscored the case for a more aggressive tightening by the Fed and capped a punishing week in the bond market.

The municipal market has a history of outperforming during periods when the Fed hikes rates, because as yields rise, the tax-free interest that munis pay makes them more attractive.

The selloff worsened after minutes from the Federal Reserve’s latest meeting showed officials considering earlier and faster interest-rate increases than expected.

Treasury yields rose a second day amid increasing conviction that the Federal Reserve will raise rates at least three times beginning in May.

The crosscurrents of persistently high inflation and the pandemic’s refusal to go away have caused large daily swings in yield, indicative of poor liquidity.

Bond traders’ expectations for how fast inflation will rise over the coming five years have topped 3% for the first time on record.

Investors in need of an alternative to certain T-bills are flocking to the Federal Reserve’s facility for reverse repurchase agreements. That’s adding to demand created by T-bill supply cuts.