Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Invest

Bond rebound reliant on banks

By Jack Derwin · September 20 2016
Reading:
egg
egg
egg

Invest

Bond rebound reliant on banks

By Jack Derwin
September 20 2016
Reading:
egg
egg
egg

Bond rebound reliant on banks

author image
By Jack Derwin · September 20 2016
Reading:
egg
egg
egg

Global bond yields experienced a small rally but remain uncertain as the market watches to see what central banks will do next.

AMP chief economist Shane Oliver says the recent slight resurgence of bonds was due to the downturn in the share market.

“While the US share market recovered some of its loss from the previous week as fears of an imminent Fed rate hike declined, other major share markets fell over the last week as bond yields generally rose further and they saw a catch up to the earlier fall in US shares,” he said.

As reported, despite low interest rates globally, growth continues to look sluggish with discussion around the introduction of fiscal policy likely prompting recent market activity.

“The back-up in bond yields (just a flick in a big picture context) and volatility in share markets over the last week or so in part has its origins in concerns that some central banks have hit the bottom of the monetary policy barrel and that the focus will now shift to fiscal stimulus,” Mr Oliver said.

Advertisement
Advertisement

With the market closely watching the European Central Bank, the Bank of Japan, as well as the possibility of a US rate hike later in the year, the forecast for bond remains unclear.

“The bottom line is that a shift in reliance away from monetary policy towards fiscal policy and structural reforms is desirable but it’s likely to be a gradual process and vary from country to country. It’s unlikely to justify a rapid back up in bond yields, more like a choppy bottoming, or sharp fall in share markets” Mr Oliver said.

“Ultra-low bond yields point to a soft medium-term return potential from them, but it’s hard to get too bearish in a world of fragile growth, spare capacity, low inflation and ongoing shocks. That said, the bond rally this year had taken yields to pathetic levels leaving them at risk of a snapback, which we are now seeing.”

Bond rebound reliant on banks
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

Join the nestegg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

Join The Nest Egg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

LATEST POLL

Are you seeking alternatives to equity and property in the next 12 months?

Yes - 44.4%
No - 55.6%

Total votes: 473
The voting for this poll has ended

From the web

Recommended by Spike Native Network

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.