Fixed income securities have reached a milestone as central banks globally are tightening policies to combat decades high inflation.
Bloomberg Global Aggregate Index, a benchmark for government and corporate debt, has fallen 11% from a high in early 2021. This marks the biggest decline form a a peak since 1990, even exceeding a 10.8% drawdown during the financial crisis in 2008.
The Fed earlier raised interest rates by 25 basis points last week, right after in a separate occasion the Fed signaled it take the capacity to hike rates more than half a percentage points if the scenario call for it.
An outlook on higher interest rates is dampening debt securities and returns are further eroded by decades old inflation.
Slowing economic growth poses another challenge to corporate debt raising credit risks.
