Sovereign bond market turmoil to spill well into next year — RTRS poll

Turmoil in global sovereign bond markets is set to persist for another six months to a year as central banks carry on raising interest rates to bring down inflation, according to a Reuters poll of market strategists.

The poll shows that over 65% majority of bond strategists, 14 of 21, who answered an additional question in a Reuters Oct. 19-21 poll said the current turmoil in sovereign debt markets will persist for at least another six to 12 months. This is including one who said it would last one to two years. The remaining seven said less than six months the poll showed.

“We’re probably in for at least another year of significant volatility in bond markets...(and) it could definitely be more,” said Elwin de Groot, head of macro strategy at Rabobank.

“Volatility is not going to go away anytime soon. Even when central banks are starting to move closer to that pivot point, so to speak, we may have other sources of uncertainty keeping volatility in markets high. And high volatility means higher risk premiums.”

The benchmark US 10-year Treasury yield was expected to drop from its 14-year high of 4.27% hit on Friday to 3.89% by year-end, the article said. It was then forecast to fall further to 3.85% and 3.58% in the next six and 12 months respectively.