Global government bonds sold off in August, notably in long-dated maturities, as G7 central banks maintained their aggressive inflation-fighting stances and negated speculation of an imminent pivot, despite the risk of recession, says FTSE Russell’s ‘Fixed Income Insights.’ Most G7 central banks, including the Bank of Canada, stayed united in their resolve to continue raising policy rates to tame inflation, despite the risk of a global recession. However, the slope of the Canadian yield curve signals recession as Canadian, U.S., and UK 10/2s yield curves stayed inverted in August as the short end priced in further rate hikes and the long end anticipated a sharp deterioration in growth.
- PWC