Clobbered Fed rate cut bets wipe out even last year’s bond gains
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Investors who expected an extension of last year's global bond gains have been disappointed as expectations of higher US interest rates have wiped out the 4.2% return on global sovereign debt from 2023. The decline in bond prices has been driven by investors now expecting under two Fed interest rate cuts this year, a significant backtrack from earlier bets of more than 150 basis points of easing starting in March. The selloff has room to run as the US inflation print this week sent yields surging across the curve. However, some believe there is scope for bonds to recoup their losses when the Fed begins easing, and investors may be looking to buy on dips. Sticky US inflation remains a concern for bond investors, and some predict further declines in bond prices.



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