End of 30-year bull run for bonds sparks record capital outflows from emerging markets
Surging bond yields across developed economies, accelerated by the election of Donald Trump, have hit emerging markets hard
Last month’s shock election of Donald Trump as US president sent global bond yields skyrocketing, prompting a widespread view that the 30-year bull run in debt markets is finally at an end.
Emerging market bonds, which had benefited from investors’ appetite for yield in the past, have been left reeling by a tidal wave of capital outflows.
The yield on the benchmark 10-year US Treasury bond, which moves inversely to its price, hit 2.39 on Tuesday after peaking at 2.45 per cent last week, after data showed that the pace of growth among domestic services industries accelerated faster than forecast in November.
The two-year Treasury yield increased to 1.12 per cent and the 30-year yield rose to 3.08 per cent, after hitting its highest level in 13 months on Monday.
We are possibly seeing the turning point for a 30-year rally in bonds across developed economies
The picture is the same in other developed economies. The yield on Japan’s 10-year government bond rose to 0.05 per cent on Tuesday, the highest level since mid-February, while the yield on UK 10-year government bonds climbed to 1.43 per cent earlier this week, similar to the level seen before the country’s decision to leave the European Union.
