US CPI sends global bond yields spiking higher


Craig Inches, Head of Short Rates and Cash 

14 February 2018

US Treasury yields briefly hit their highest level in over a year as the market grappled with the latest inflation numbers, which came in much higher than consensus had predicted. This sell-off fed through into global government bond markets, with gilt and bund yields also spiking.
While the next psychological barrier for 10 year Treasury yields of 3% is still a little way off, this latest data is likely to reignite the diet of increased volatility currently feeding both bond and equity markets, although fixed income assets should weather this better. 
We’re maintaining a shorter duration bias across our government bond funds, to better protect against the impact of rising bond yields.

US Treasury yields briefly hit their highest level in over a year as the market grappled with the latest inflation numbers, which came in much higher than consensus had predicted. This sell-off fed through into global government bond markets, with gilt and bund yields also spiking.

While the next psychological barrier for 10 year Treasury yields of 3% is still a little way off, this latest data is likely to reignite the diet of increased volatility currently feeding both bond and equity markets, although fixed income assets should weather this better. 

We’re maintaining a shorter duration bias across our government bond funds, to better protect against the impact of rising bond yields.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.