The Global bond markets have seen a continued decline since the U.S Federal Reserve hiked rates amid the rising inflation. The value of global bonds has dropped by $745 Billion this week causing a total loss from All-time High to $4.8 trillion, informs Holger Zschaepitz.
Global bond markets decline by 11% since Jan 2021
According to Bloomberg Global Aggregate Index, Global bond markets which peaked last year have deflated by 11% from its high in January 2021. The loss suffered has been described as the biggest decline since 1990. This decrease has also surpassed the 10.8% decline during 2008’s financial crisis. The current fall of about $2.6 trillion has been compared with the $2 trillion decline in 2008.
Bloomberg reported that there were signs of easing brutal selloff this mid-week but rising inflation is pressuring the world over concerns like higher financing costs. Investors are losing their interest in holding safe government bonds.
The bonds have suffered well due to the central banks tightening their policy to counter the increasing inflation rate. Meanwhile, last week Fed lifted interest rates by 25 points. Jerome Powell has warned the market by saying that they are prepared to increase them by a half percentage point if needed.
In addition, the yield on 10-year Treasuries also slipped by two points to 2.36% on Wednesday. It managed to surge to its peak since 2019, reports Bloomberg
Can Crypto market ride on it?
Big market losses are always bad news for any market but maybe it is a piece of good news for the cryptocurrency market. The global crypto market cap stands around $2 trillion at this moment compared to global bonds valuation.
The global crypto market managed to peg a $3 trillion market valuation last year, since then it has been a downward ride for it. The reasons behind the decline in the markets are many but right now digital asset market is on an upward ride. It has received recognition from several countries while many biggest brands and banking institutions have declared their plans to get into it. However, it would be interesting to see that if money withdrawn from the bonds can ride into the crypto market.