GLOBAL BOND MARKETS


New Zealand QoQ CPI inflation rises to 0.6% QoQ in Q1 vs. 0.6% expected


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THEMES AFFECTING Bonds



iShares Global Utilities ETF - Daily Chart

iShares US Utilities ETF - Daily Chart

Bonds as related to other asset classes

Bond prices and bond yields are many times the drivers behind price movements in currencies and other asset classes. In this section, we aim to explain how those movements are being perceived and traded by our dedicated contributors and in-house analysts.

Utilities are big borrowers and their profits are enhanced by lower interest costs. Conversely, the utility average tends to decline when investors expect rising interest rates. Because of this interest-rate sensitivity, the Utilities Average is regarded by some as a leading indicator for the stock market as a whole.

Utilities are part of our Risk-On/Off indicators you can find by clicking here.

Bond prices and bond yields trend in opposite directions. This is important for understanding most of the analysis and news published on this page.

It's also important to know the underlying dynamic on why a bond's yield is rising or falling: it can be based on interest rate expectations or it can be based on market sentiment -uncertainty- and a "flight to safety" to bonds which are traditionally considered less risky.

The rate of change of interest rates, either the target rate or market rates, is important because this causes either stocks or bonds become more attractive. When this happens prices will tend to trend as money flows from one vehicle to the other until the new relationship is adequantely reflected in prices.

Bonds and stocks are always competing for investor money, and less so commodities. These usually trend in opposite direction of bond prices (falling commodity prices usually produce higher bond prices, vice versa); therefore, commodities would trend in the same direction as interest rates.

US Treasuries explained

If you are trading USD based or quoted pairs, watch the US bond market since a movement in Treasury yields impacts the US dollar. The driver of many movements in Treasury yields are partly driven by comments from Fed officials, so pay close attention to any news coming from US monetary authorities. US stocks usually get a boost from rising bond prices (falling Treasury yields), specially in inflationary times. But if they don't, then it's worth looking for market sentiment and reasons why the equity markets appear to be taking a more cautious stance. US stocks prices can also rise with falling Treasury prices (with rising yields) during a deflationary environment. In this case stocks and interest rates rise together which spurs global demand for the US Dollar.

UK Gilts explained

Global bond prices tend to move in synchrony. But there are moments when a country's bond market experiences a sharper movement than other bonds markets. Sometimes it may be a currency movement: The Gilt is the 10-year benchmark in the UK fixed income market. It's correlation to the Sterling is usually positive and decoupling between both markets serves as an early alert that some Intermarket relationship has changed. Changes in foreign exchange prices can overwhelm relative return calculations for international investors buying Gilts as an investment. When stripped out the currency component, UK Gilts should still provide some return to investors otherwise other bond markets, Treasuries for instance, may become attractive.
It is also true that a prolonged trend in energy prices is also a factor to consider as it will affect inflation expectations and thereby BOE's monetary policies.

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Latest Bonds & Interest Rates Analysis


Latest Latest Bonds & Interest Rates Analysis

Editors' picks

EUR/USD extends its downside below 1.0630, focus on ECB’s Lagarde speech

EUR/USD extends its downside below 1.0630, focus on ECB’s Lagarde speech

EUR/USD extends its downside near 1.0620, bouncing off the Year-To-Date low of 1.0600 during the early Asian session on Wednesday. However, the hawkish comments from the Fed officials and the safe-haven flows might boost the US Dollar and cap the upside of pair in the near term. 

EUR/USD News

GBP/USD remains on the defensive above 1.2420, eyes on UK CPI data

GBP/USD remains on the defensive above 1.2420, eyes on UK CPI data

The GBP/USD remains on the defensive around 1.2430 during the early Asian session on Wednesday. The further upside in the US Dollar from a hawkish tilt by Federal Reserve Chair Jerome Powell and upbeat US Retail Sales data weighs on the pair. 

GBP/USD News

USD/JPY trades with mild losses below 155.00 on risk-aversion

USD/JPY trades with mild losses below 155.00 on risk-aversion

USD/JPY trades with mild losses near 154.65 on Wednesday during the early Asian trading hours. The robust US economy and sticky inflation data have triggered the expectation that the Fed might delay the easing cycle to September from June, which provides some support to the US Dollar.

USD/JPY News

Gold ascends but remains shy of testing $2,400 amid hawkish Fed remarks

Gold ascends but remains shy of testing $2,400 amid hawkish Fed remarks

Gold prices edged higher late in North American session, gaining 0.22% following a hawkish tilt by Fed Chair Jerome Powell. Economic data from the United States was mixed, though Monday’s Retail Sales report and Powell’s remarks kept US Treasury yields higher, capping the yellow metal’s advance.

Gold News

WTI trims gains amid market caution after Iran’s attack on Israel, remains above $85.00

WTI trims gains amid market caution after Iran’s attack on Israel, remains above $85.00

West Texas Intermediate Oil price edges higher to near $85.30 per barrel during the Asian trading hours on Tuesday. The crude Oil prices receive upward support due to concerns about the escalating tensions between Israel and Iran, particularly in the wake of Iran's missile and drone attacks on Saturday.

Oil News

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