Bond yields rise again

The Bank of Japan rattled investors after announcing that it would allow the 10-year Japanese government yields to rise as much as 50 basis points. That was up from the previous 25 basis point cap and signals the BoJ’s first step toward tighter monetary policy. As a result, Treasury rates climbed in unison on both sides of the Atlantic. The US 10-year Treasury yield rose from 3.49% to 3.75%. Similarly, the 2-year yield gained 25 basis points from 4.18% to 4.33%. In Europe, the yield on the German 10-year Bund jumped from 2.15% to 2.40%.

The BoJ surprise decision also hit investment grade corporate bonds. The IBOXX € Liquid Corporates index was down 1.00% over the week while the IBOXX Ishares $ Investment Grade Corporate Bond Index lost 1.33%.

High-yield bonds edged down 0.29% in Europe (IBOXX € Liquid High Yield Index) and 0.39% in the US (Markit iBoxx USD Liquid High Yield Capped Index).

Emerging debt in local currencies bucked the trend (up 1.52%) as the dollar index weakened further.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.