Horrific YTD performance for global high quality bonds

The Bloomberg Global Agg. Bond index, which is composed of corporate and government bonds, experienced with a decline of -11.6% year-to-date by far the worst performance on record! The losing run came only to a halt in mid-May with a loss of -12.4% and recovered only slightly since then.

The chart in the monthly spotlight of the Alternative Credit Letter shows the individual calendar year returns of the index over the last ~30 years and illustrates the unprecedented sell-off in high quality bonds in 2022 caused by the sharp increase in interest rates. The index has an average duration of around 7 years and hence, the boost in rates was felt heavily by this widely used reference index.

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