Despite the strong showing of corporate bonds in 2024, volatility in the government bond space has left overall returns from fixed income markets somewhat short of what many investors expected for the year.
Central banks loom large as a key reason for this disappointment; while they have started to cut rates, they have not delivered what the market expected. Remember talk in January of six rate cuts by the end of the year? That optimistic outlook was speedily discarded as economies – mainly the US – proved to be more resilient than many anticipated. Throw in a significant amount of political upheaval and the turbulence in bond markets makes sense. Will 2025 offer similar volatility? The short answer is yes - we expect bond markets to remain volatile in 2025. Four Graphs explain...
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