(TheStreet) - Bonds have taken it on the chin recently amid raging inflation and the beginning of the Federal Reserve’s interest-rate increases.
Consumer prices jumped 7.9% in the 12 months through February, a 40-year high. And the rise in commodity prices sparked by the Russia-Ukraine war might drive that figure higher.
Meanwhile, the Fed raised its federal funds target rate by 25 basis points March 16, and Fed Chairman Jerome Powell suggested March 21 that a 50-basis point rate hike is possible in the future. The Fed’s median forecast calls for another six rate hikes this year, assuming they’re all 25 basis points.
The 10-year Treasury yield has soared 80 basis points since the beginning of the year to 2.31%.
The Bloomberg Global Aggregate Index of bonds dropped 11% from its January 2021 high through March 22, the biggest decline since at least 1990, Bloomberg reports. That translates to an astounding loss of $2.6 trillion in market value, surpassing the $2 trillion decline of 2008, during the financial crisis.
By Dan Weilmar
March 23, 2022
Dan is a freelance writer whose work has appeared in The Wall Street Journal, Barron's, Institutional Investor, The Washington Post and other publications.
