Global equities, meanwhile, are nursing losses of about 6% this year, even as stocks have bounced back in recent days as more investors bet they will help hedge against inflation. The retreat in both fixed-income and stock markets in 2022 is upending the dynamics of a classic 60/40 portfolio that is meant to balance out any losses from riskier share markets with the more stable cash flow of bonds.
The meltdown in global debt markets is a reminder of the Fed’s tightening cycle in 2018, though the broad global bond index wound up losing only 1.2% for that full year. But unlike four years ago, price pressures are now much stronger and the global supply chain is beleaguered.
For emerging Asia, the threat of stagnant growth and accelerating inflation adds to the upside risk for yields, according to Australia & New Zealand Banking Group Ltd.
“We are likely to continue seeing upward pressure on yields as we expect monetary tightening in a number of Asian economies to start in” the second half of the year, said Jennifer Kusuma, a senior Asia rates strategist at the bank.
Data on the Bloomberg Global Aggregate Index before 1999 is monthly rather than daily and the constituents and duration of aggregate indexes fluctuate. Fixed-income investors can still make money by betting against bonds.