Since the US central bank began easing rates in mid-September, two-, five- and 10-year Treasury yields have risen from around 3.5% to above 4%. The selloff has been accompanied by traders reducing the chances of sweeping cuts amid resilient economic data, with a little more than three quarter-percentage point cuts over the coming 12 months to around 3.7%.
Investors should favour global bonds over longer-dated US Treasuries, with sticky inflation forcing the Federal Reserve to the sidelines next year, according to Jean Boivin, head of BlackRock Investment Institute.
“We see inflation not getting out of control, but not cooperating in a way that allows rates to be cut,” he told Bloomberg in an interview at BlackRock’s offices in New York on Wednesday. “This is not the beginning of an easing cycle. It is going to be an adjustment, a recalibration.”
