Outlook for record-low interest rates fuels rally in bonds
Bonds are rallying from the United States to Germany to Australia on speculation that the Federal Reserve will hold interest rates at a record low to support the world's biggest economy.
Bonds are rallying from the United States to Germany to Australia on speculation that the Federal Reserve will hold interest rates at a record low to support the world's biggest economy.
Ten-year yields were at or near 2014's lowest levels in 21 of 25 developed markets tracked by Bloomberg. German benchmark yields dropped to a record amid expectations from traders that the European Central Bank would resort to buying bonds as it tried to spur growth by reducing borrowing costs.
Unrest in Ukraine and Gaza is fuelling the rally by driving demand for the relative safety of government debt.
"The potential implications for global growth seemed to have underpinned Treasuries and global fixed income," said Su Lin Ong, the head of Australian economic and fixed-income strategy at Royal Bank of Canada. "It's hard to see an end to some of these geopolitical risks."
The implications for global growth seemed to have underpinned Treasuries
The US 10-year bond yield fell to 2.4 per cent on May 29, the least since June 2013, while German 10-year bund yields dropped to a record 1.109 per cent on Tuesday.