BofA: European Bond Investors Regret Chasing Rally as Selloff Hits
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Bank of America reported on September 11 that investors who heavily bought European and UK government bonds in recent months may regret their decisions after a sharp bond market sell-off. A BofA survey found that despite growing pessimism about interest rate prospects, respondents increased holdings of long-duration bonds since early August and maintained them. Soaring energy prices intensified inflation concerns, causing bond yields to surge, with a global bond sell-off exacerbating the trend. Strategists including Ralf Preusser noted that the divergence between duration exposure in euro- and sterling-denominated bonds and investor sentiment has reached an all-time high, with buyer's remorse evident. They explained this helps explain why Gilts and Bunds suffered heavy selling as markets repriced central bank policy expectations, especially given most investors still believe the ECB will have to reverse course next year.
Source report
Sept. 11 — Bank of America has warned that investors who piled into European and UK government bonds in recent months may already be regretting their moves, following a sharp sell-off in the bond market.
According to a bank survey, although respondents have grown more pessimistic about the interest rate outlook, they increased their holdings of long-duration bonds in early August and have kept those positions. As surging energy prices intensified inflation concerns, bond yields rose sharply, with a wave of selling across global bond markets further amplifying the trend.
In a report released on Friday, strategists including Ralf Preusser wrote:
"The divergence between duration exposure in euro- and sterling-denominated bonds and investor sentiment has reached an all-time high. Buyer's remorse is evident. This helps explain why Gilts and Bunds suffered such heavy selling this week as markets repriced central bank policy expectations, especially given that most investors still believe the ECB will have to reverse course next year."
Source
thsWestern