Black Rock: The Avengers of Bonds have awakened, and the danger of collapse has increased

Warning market rang bonds While inflation hits into the red, while central banks fail to control inflationary pressures.
Bales called indebted Italy and the UK, where the central bank, instead of withdrawing money, decided to make new purchases (“quantitative easing” or “money printing”) to hold gold and sterling…
Therefore, old investment havens are now considered unsafe, with The Avengers of Bonds have awakened from previous years’ slumber.
In particular, according to the Black stoneIn this macroeconomic environment, the safe haven axiom of bonds no longer applies: “It’s outdated.”
Why; Or notCentral banks raise interest rates to tame inflation, causing a recession.
secondlyInterest rates will not fall even though a recession is approaching.
ThirdInvestors will demand more compensation for the risks of holding government bonds amid high debt burdens.
Therefore, the investment giant gives a lower recommendation than government bonds…

end of the season…

If we are going through the so-called “Great Moderation,” a period of growth and low inflation, then central banks, seeing signs of deflation, will ease monetary policy.
But that era, says BlackRock, is long gone.
Central banks are determined to stifle growth in order to tame inflation.
Somehow, in this recession, caused by distortions in the supply curve, inflation and rising interest rates can break the fragile equilibrium under which investors have been taking on increasing debt burdens in exchange for a higher premium or compensation.
The impending collapse of British debt offered a first taste of what might come next.
Bond recipients seem to have woken up, as markets question the credibility of the central bank’s macroeconomic policy.
In the UK in particular, the yield differential between 10-year and 2-year bonds has widened, while yield curve moves for German and German bonds are showing a muted response that is yet to be priced.

Prospect…

According to BlackRock, yields on long-term maturities are expected to rise in developed markets.
Why; Politics, inflation and debt.
Central banks face a sharp trade-off between growth and inflation.
However, their forecasts, as well as the briefing given by the International Monetary Fund last week, fail to realize that the cost of lowering inflation targets causes recession.
So it is expected that central banks will eventually stop raising interest rates.
Central banks will eventually stop raising interest rates.
But they won’t do enough to bring inflation back to target, which means they won’t be able to start easing policy.
All of the above highlights why bonds do not turn into investment havens…
The energy crisis has already put the UK on the brink of recession and other countries are following suit.
It should be noted that Italy shares some of the UK’s weaknesses – deteriorating fundamentals due to current account deficits and a high debt burden.
Finally, according to BlackRock, strong companies’ balance sheets should reduce default risk even in a recession.

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