Global bonds climb 20% from 2022 low with Fed set to resume cuts

A global bond gauge has surged more than 20% from its 2022 trough as cooling US labor data fuel bets the Federal Reserve will step up policy easing.

Bloomberg’s GlobalAgg Index, which tracks sovereign and corporate debt across developed and emerging markets, has climbed to its highest level since March 2022 amid a broad fixed-income rally.

Traders are widely expecting the Fed to cut rates next week, with some wagers pointing to a half-point move. Bonds have gained ground as central banks slash borrowing costs in response to ebbing inflation and mounting signs of labor market strain.


“Curves have been highly directional and that too has brought about a grab for yield, that perhaps also was driven by fairly significant shorts placed in the US market as seen in surveys,” said Martin Whetton, head of financial markets strategy at Westpac Banking Corporation.

Despite the rebound, longer-dated bonds remain under pressure amid mounting fiscal risks. France’s premier has warned of a debt crisis as the government reels, while in the UK investors await Chancellor Rachel Reeves’s November plan to balance growth initiatives with spending restraint.

In Japan, Prime Minister Shigeru Ishiba’s decision to step down has fueled uncertainty, raising the prospect of a successor viewed as less committed to fiscal discipline.