Global Bond Markets

17/12/2008

The global economic downturn has shown little evidence of respite. The number of US jobless claims surged to the highest level since 1992 and the price of previously owned homes fell by the largest monthly amount in 40 years. In addition, US Q3 GDP fell by 0.3%, and data released around the world showed that a number of economies were already in recession – Q3 Eurozone GDP shrank by 0.2%, the second consecutive quarter of negative growth. Global inflationary pressures continued to recede, reinforcing the likelihood of more global interest rate cuts, which should be supportive for government bonds. Against this backdrop, government bonds continued to rally, whereas corporate bond prices fell.