, evidence that bond markets are not yet out of the woods when it comes to inflation and the threat of higher-for-longer than expected interest rates.
Ed Hutchings, head of rates at Aviva Investors, said that without U.S. economic data cooling, it was hard to bet with conviction that bond yields would fall. The latest moves highlight market sensitivity to inflation even as it slows from double-digit levels in 2022.They expect just 40 bps of Bank of England cuts this year, down from around 70 bps in late March, and around 70 bps from the European Central Bank, down from 90 bps in early April .
Many investors favour euro zone bonds, which have outperformed as inflation nearing the ECB’s 2% target paves the way for rate cuts expected to start in June. If traders’ BoE expectations recover, that would favour Britain’s debt. Goldman Sachs recommends buying 30-year gilts over Treasuries.