Quick View: Early Innings Of A Sovereign Bond Bull Market?

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Includes: BIL, BNDX, BWX, DFVL, DFVS, DIAL, DLBS, DTUL, DTUS, DTYL, DTYS, EDV, EGF, FIBR, FIXD, GBIL, GIM, GLBY, GOVT, GSY, HYDD, IEF, IEI, IGOV, ITE, PLW, PST, RISE, SCHO, SCHR, SHV, SHY, TAPR, TBF, TBT, TBX, TLH, TLT, TMF, TMV, TTT, TUZ, TYBS, TYD, TYNS, TYO, UBT, UST, VGIT, VGLT, VGSH, VUSTX, ZROZ
by: Janus Henderson Investors
Summary

With growth and inflation slowing and developed market central banks remaining dovish, the case is strong for remaining bullish on duration.

Technically, the first buy signals for 10-year bond yields began to emerge last December - we may be in the early innings of a sovereign bond bull market.

Places like the U.S., Canada, Australia, even German Bunds registered some very interesting technical buy signals, says Jenna Barnard, Co-Head of Strategic Fixed Income.

By Jenna Barnard, CFA

Jenna Barnard, Co-Head of Strategic Fixed Income, shares her latest views on the bond market, explaining what she sees as possibly the early innings for an intermediate, cyclical, sovereign bond bull market.

Transcript

Jenna Barnard: It is Thursday, the 14th of March, and I wanted to provide an update on the bond market from the Strategic Fixed Income desk. The first thing to say is that we remain bullish on duration. Longer-dated interest rate risk in the developed economies looks an attractive place. Growth is slowing, inflation is slowing and central banks are pivoting dovish. In certain economies, there is a risk of a hard landing, driven by the consumer. Places like Australia, in particular, but also Canada is starting to be of renewed interest. So duration is an interesting and I think attractive place. Technically, we saw some of the first monthly buy signals in 10-year bond yields last December that we have seen in really four or five years. Places like the U.S., Canada, Australia, even German Bunds registered some very interesting technical buy signals. So we may actually be in the early innings of this intermediate, cyclical, sovereign bond bull market.

But as I said earlier, there is a risk of a hard landing in certain economies, driven by consumer retrenchment and housing markets.

Thank you.

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Duration measures a bond price's sensitivity to changes in interest rates. The longer a bond's duration, the higher its sensitivity to changes in interest rates and vice versa.

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