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Home MIDDLE EAST Global bonds slump to a discount for first time since 2008

Global bonds slump to a discount for first time since 2008

RIYADH: A measure of global fixed-income bonds fell after Federal Reserve Gov. Lael Brainard cited a faster-than-expected rundown of the central bank’s debt holdings, Bloomberg reported. 

The Bloomberg Global Aggregate Index fell below a measure of so-called par value Tuesday, with its price falling to 99.9, under the key 100 level at which bonds are often sold to investors, according to Bloomberg. 

It is the first time since 2008 that the scale is trading at a discount to face value. 

Global investors have fled the bond market this year, as high inflation has forced many central banks to speed up plans to raise interest rates in a bid to curb price hikes.

The index which contains government and corporate debt, is down 7.4 percent this year, with a market value of nearly $4.6 trillion, according to data compiled by Bloomberg.

Brainard said the task of curbing inflation pressures is of paramount importance and that the Federal Reserve will steadily raise interest rates as it begins cutting the balance sheet next month.

Treasuries continued their slowdown on Wednesday, pushing the benchmark 10-year yield more than 2.6 percent to the highest level since 2019, according to Bloomberg. 



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