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Investing.com – The U.S. bond market suffered its biggest sell-off as benchmark bond yields rose 5x for the first time since late 2020, but it’s not over yet and more turmoil awaits the market, according to BlackRock, Business Insider writes.
The reasons for this are inflation, the Fed’s long-term interest rate policy and the growing debt burden in the United States. The world’s largest asset manager said the US bond market is in the midst of an unprecedented three-year collapse with no end in sight.
The rise in Treasury yields has accelerated in recent weeks, spooking traders across all asset classes. The concerns come as the central bank has raised its key rate by more than 500 basis points since the start of 2022 to curb pressure on consumer prices and has no plans to lower it yet.
BlackRock itself said it avoids investing in long-term US bonds. To recap: Yields rise when bond prices fall.
“We continue to avoid long-term US bonds even after their sharp rise. Why? “We think the term premium – the compensation investors demand for the risk of holding long-term bonds – will continue to rise, pushing yields higher as inflation rises, interest rates rise and debt loads are high.”
— Materials from Business Insider were used in preparation
2023-10-11 06:52:00
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