Banking woes drive reassessment of duration risk and Fed policy
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The disconnect between market expectations on Fed rates and the dot plots has re-opened, despite the Fed downplaying systemic risks. Banking strains suggest tighter financial conditions than widely perceived. The wipe-out of AT1 bondholders in Credit Suisse signals the risks inherent in deeply subordinated bank debt.
- Growth and inflation expectations – Market focus shifts to “too much tightening, too late”
- Yields, curves and spreads – Extent of curve inversion declined as 2-year yields fell sharply, bank spreads widened
- Performance – Safe havens and duration dominate returns in March and Q1 as banking shock unfolds
- Sovereign and climate bonds – “Greenium” more evident again in long climate-WGBI after March rally
These reports provide actionable insights on global fixed income markets. They cover shifts in global yield curves and credit spreads, across sovereign, inflation-linked and corporate indices, and FX-adjusted return performance using proprietary month-end data from our global fixed income indices.
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