Tumultuous year in bond markets draws to a close

LONDON : It's been an extraordinary year for bonds after long-dormant inflation jumped and central banks began unwinding unprecedented stimulus sparked by COVID-19.

At 1.42per cent, 10-year yields appear at relatively modest levels given inflation has reached almost four-decade highs near 7per cent. Germany's 10-year Bund yield is up just 20 bps this year, highlighting a divergence between euro area and U.S. monetary policy as well as Omicron-triggered uncertainty.Australia's central bank in November abandoned an ultra-low target for bond yields in a policy known as yield curve control, a step towards unwinding pandemic-era stimulus.

The EU has raised 91 billion euros in bonds and bills for the fund this year, after raising another 50 billion euros for the SURE unemployment scheme it started funding last year.Green bond issuance is set for yet another record year, roughly doubling from last year to nearly US$500 billion, according to Refinitiv data.Increased green bond issuance has eased scarcity, shrinking the"greenium" investors have to pay to get hold of corporate green bonds.

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