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Bond sell-off worst since 1949, Financial institution of America says

ByEditorialTeam

Sep 23, 2022

A Financial institution of America emblem is pictured within the Manhattan borough of New York Metropolis, New York, U.S., January 30, 2019. REUTERS/Carlo Allegri

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LONDON, Sept 23 (Reuters) – International authorities bond losses are on the right track for the worst 12 months since 1949 and investor sentiment has plummeted to its lowest because the monetary disaster, BofA International Analysis mentioned in a observe on Friday.

This 12 months’s dramatic bond tumble threatens credit score occasions and a possible liquidation of the world’s most crowded trades, together with bets on the greenback which have taken the buck to multi-year highs in opposition to different currencies and bets on U.S. expertise shares, the financial institution mentioned. learn extra

Bond funds recorded outflows of $6.9 billion through the week to Wednesday, whereas $7.8 billion was faraway from fairness funds and buyers plowed $30.3 billion into money, BofA mentioned in a analysis observe citing EPFR information.

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Investor sentiment is the worst it has been because the 2008 international monetary crash, the observe mentioned.

U.S. markets seem set for an additional risky day. Wall Road futures fell on Friday as buyers fretted over the prospect of an financial downturn and a success to company earnings from the U.S. Federal Reserve’s aggressive coverage tightening strikes to quell inflation. The S&P 500 is down practically 5% this month and approaching its mid-June bear market lows. learn extra

Treasury yields, which transfer inversely to bond costs, have been once more rising after hitting their highest degree since 2011 on Thursday, with the U.S. benchmark 10-year yield lately round 3.76%.

The bond crash “threatens liquidation of (the) world’s most crowded trades” together with lengthy greenback and lengthy U.S. tech, BofA wrote.

BofA mentioned buyers confronted extra inflation, rates of interest and recession shocks, including a bond crash meant {that a} excessive in credit score spreads and low in shares had not but been reached.

Aggressive charge hikes from main central banks to include inflation, at the same time as progress slows, has unnerved world markets and sparked a contemporary surge in bond yields this week.

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Reporting by Lucy Raitano Extra reporting by Ira Iosebashvili
Modifying by Dhara Ranasinghe and Mark Potter

Our Requirements: The Thomson Reuters Belief Ideas.

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