Government bond markets have clawed back part of this year’s heavy losses in recent weeks as investors’ attention shifts from sky-high inflation to signs that economic growth is slowing.
Bonds have endured a torrid year so far as major central banks rush to contain runaway price rises by embarking on a rapid tightening of monetary policy. But longer-term government debt — an ultra-safe asset which tends to benefit from fears over the health of the economy — has steadied in recent weeks as a sell-off in riskier assets like stocks accelerates.
A Bloomberg gauge of long-term US government bonds is on course for a third consecutive weekly rise, gaining more than 4 per cent since May 6, a turnround echoed in European markets. Although the recovery remains modest compared with the scale of earlier declines — the index is more than 18 per cent lower year-to-date — some investors sense a turning point for the heaviest global bond sell-off in decades.