Bond Yields Rocket To 2-Decade High As Global Sell-Off Deepens
Millions of investors are sitting on portfolios built for a world that seemingly no longer exists, warns the CEO of one of the world's largest independent financial advisory organisations.
Nigel Green ofdeVere Group's comments come as a broad gauge of global government bonds surges to 3.72%, its highest since mid-2008, with yields erupting in Japan, Australia and the US after Fed chairman Kevin Warsh's hawkish Jackson Hole speech collided with a fresh spike in oil prices driven by escalating geopolitical tensions.
Japan's 10-year yield smashed through levels unseen since 1996, while Australian debt spiked to heights last touched in 2011, and Nigel Green says the sheer breadth of the move is what should worry investors most.
AdvertisementGold tearing toward fresh record highs is telling its own story, he adds, though he warns against a stampede.
The deVere CEO is wary of reading the selloff as proof the Fed is about to hike in September, arguing bond markets have a habit of sprinting ahead of the central banks they're supposedly forecasting.
For investors, he argues duration risk is the danger hiding in plain sight, and it's brutal for anyone who ignores it.
Rising borrowing costs in Japan, the UK and the US, driven as much by government spending worries as by inflation, add fuel to an already volatile fire, he notes.
Asked what he'd say to investors rattled by the swings, Nigel Green doesn't soften it.
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