'Bond vigilantes' are hiding as the bond market approaches crisis levels, says UBS | The Business

Описание: The bond markets are signalling that central banks are fast running out of time to contain inflation. They're worried about stagflation, where rising unemployment collides with rising prices. Bond markets in the UK, Japan and the United States are all reaching 12-month highs and, in some case, to levels not seen since the global financial crisis (GFC).

UBS global wealth management executive director Mark Trevarthen sees higher inflation and rising interest rates ahead. "We foresee, you know, ongoing volatility until the crisis in the Middle East is resolved. But ultimately, you know, we think that this resolution will result in slower economic growth and some stabilisation for bond yields further down the track."
And there is a risk, Mr Trevarthen says, that the bond crisis could escalate from here. "So we would attribute a 20 per cent chance of that happening."
In order for that to happen, he says, "you would likely see a prolonged conflict in the Middle East. You would see a spike in energy prices well north of $US100 a barrel for a prolonged period of time, and significant impact on the consumer, but also on longer-term inflation."

In the firing line -- share investors and mortgage borrowers. If interest rates keep rising, shares will fall in value and mortgage borrowers will be forced to cut back on other spending to cater for increased debt repayments.
"So financial assets are now reflecting one more hike from the RBA this year, actually more than one hike... We think that the RBA will deliver one more hike, but we think that's it." he said.
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