Bond yields rise while stock prices move down.
(Photo: dpa)
Frankfurt The policy shift is driving bond yields up and prices down. As measured by the Bloomberg Global Aggregate Index, which includes government and corporate bonds worldwide, the market has lost 11 percent, or $2.6 trillion, since the January 2021 peak.
This leads to shifts within the maturities, and the question repeatedly arises as to whether an “inverse interest rate structure” can be seen. This means that securities with short maturities generate higher returns than those with longer ones. That’s unusual because investors typically demand a higher rate of return the longer they commit. It is considered a sign of a recession.
The yield on five-year bonds in the US has already been higher than on 10-year bonds for a while (see chart), and for a short time they even exceeded those on 30-year bonds. According to many experts, the ratio of two-year to ten-year bonds is even more important.
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