Is the Global Bond Market Headed Towards a Sell-off Soon?

A recent Reuters poll indicates an increasing likelihood of a major correction in the global bond market coming up in the next three months

Written by: Aiswarya Gopan • Friday, June 25, 2021 • 1 min read

• Last updated: Friday, June 25, 2021

A recent Reuters poll indicates an increasing likelihood of a major correction in the global bond market coming up in the next three months, driven by central banks looking to taper stimulus efforts as economic recovery around the world picks up pace. In the most recent FOMC meeting, the Fed took markets by surprise when a majority of policymakers indicated interest in beginning discussions around tapering asset purchases and raising interest rates by 2023.

Markets reacted to the unexpectedly hawkish tones by driving a sell-off in equity markets while Treasury yields spiked higher. However, further volatility in bond yields continued into this week when Fed Chairman Jerome Powell reiterated his dovish stance and played down effects of price rise, driving the bond yields lower.

More than 60% of fixed-income strategists who participated in the poll expect global bond markets to witness sharp sell-offs over the course of the coming three months. In addition, respondents expect bond yields to edge higher in about one year from now.

The benchmark 10-year US Treasury yields could surge to 2% by next June, up from around the current levels of around 1.50%. In addition, the median forecast for the benchmark yields is to rise to 1.75% over the next three months.

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ABOUT THE AUTHOR See More

Aiswarya Gopan

Financial Writer & Editor - Asia & Europe Desk

Aiswarya Gopan is a financial journalist, editor, and content strategist with more than 19 years of experience across financial markets, fintech, blockchain, and technology. She has worked with leading cryptocurrency exchanges, including BingX and KuCoin, driving content strategy, market research, and editorial initiatives covering digital assets, DeFi, Web3, and global financial markets. Drawing on a background in cybersecurity, technology journalism, and market research, Aiswarya specializes in translating complex financial and blockchain developments into clear, timely insights. At FX Leaders, she covers cryptocurrency, stocks, forex, and macroeconomic developments across the Asian and European trading sessions.