GLOBAL BOND MARKETS
Technical Overview
Big picture
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.
Latest Latest Bonds & Interest Rates Analysis
Editors' picks
EUR/USD drops toward 1.0700 after US jobs report

EUR/USD came under renewed bearish pressure in the second half of the day on Friday and declined toward 1.0700. Stronger-than-expected Nonfarm Payrolls (NFP) data helps the US Dollar gather strength ahead of the weekend and forces the pair to stay on the back foot.
GBP/USD extends slide below 1.2450 amid a stronger USD

GBP/USD dropped further and hit fresh daily lows below 1.2450 amid a stronger US dollar. The Greenback remains firm following the release of the US May jobs report. Despite losing almost 100 pips on Friday, GBP/USD is still on track for a weekly gain.
USD/JPY spikes and retreats on mixed US NFP report, up a little above 139.00 mark

The USD/JPY pair jumps to a fresh daily high, around the 139.45 region, during the early North American session, albeit meets with a fresh supply at higher levels. Spot prices quickly retreat to the lower end of the daily range and currently trade just above the 139.00 mark following the release of the mixed US monthly jobs data.
Gold falls below $1,960 as US yields rebound after US jobs data

Gold price turned south and declined below $1,960 on Friday. After the data from the US revealed that Nonfarm Payrolls rose 339,000 in May, the benchmark 10-year US Treasury bond yield gained more than 2% and recovered toward 3.7%, weighing heavily on XAU/USD.
Oil price bounces after Senate gives debt-ceiling bill the green light

Oil price rallies for the second day on Friday as global markets breathe a sigh of relief after the US Senate votes through the debt-ceiling extension bill, vaulting the final hurdle prior to implementation. Increasing expectations that the US Federal Reserve (Fed) will pause on hiking rates at the next Fed meeting in mid-June caps the US Dollar’s progress, further helping Oil, which is priced in USD.