Bond markets battered by rising interest rates

2022-12-29T17:09:01.942Z

Stocks and bonds tumbled in tandem in 2022 as interest rates and inflation rose. 2022 marks a paradigm shift in the markets. Previously, when equity markets struggled, central banks would come to their aid by printing money and lowering interest rates. But this year, with soaring inflation, the situation has changed radically. To put an end to soaring prices, the major central banks of the planet, led by the powerful American Fed, gave a brutal thrust to their ultra-generous

2022 marks a paradigm shift in the markets.

Previously, when equity markets struggled, central banks would come to their aid by printing money and lowering interest rates.

But this year, with soaring inflation, the situation has changed radically.

To put an end to soaring prices, the major central banks of the planet, led by the powerful American Fed, gave a brutal thrust to their ultra-generous monetary policies.

Bond values move inversely to interest rates.

When rates rise, bondholders incur losses.

Read alsoTowards another sharp hike in Fed rates

Result, this year, stocks and bonds have unscrewed canned.

An exceptional situation.

"Over the past 100 years, only three, 1931, 1969 and now 2022, have recorded negative performances on both the bond markets and the equity markets",

observes Lombard Odier.