Why is there a worldwide bond market selloff? Here are 5 reasons you need to know
higher bond yields.
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While the selloff is global, it is particularly pronounced in developed markets like the U.S., UK, and Japan. In Japan, for example, bond yields have surged due to a combination of improving economic data and adjustments in monetary policy aimed at controlling inflation. Several factors are driving this trend.
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Inflation and Interest Rates
High inflation rates globally have led central banks to hike interest rates. Investors, expecting rates to remain elevated, demand higher yields for bonds, which inversely pushes bond prices down. This expectation is particularly influenced by the U.S. Federal Reserve's aggressive rate hikes to combat inflation, with similar actions seen in other major economies. The anticipation that interest rates will stay «higher for longer» has been a significant catalyst for this selloff.
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