So far, global bond markets have had an excellent period this year, thanks in part to unprecedented monetary stimulus from key central banks. The broadest global bond index, Bloomberg Barclays, has recorded a highly above-standard appreciation of 6.3% since the beginning of the year.
The sharp rise in market prices of government and corporate bonds has resulted, among other things, in the average global bond yield to maturity since the beginning of the year falling very sharply by 0.55% to the current 0.90%, which is close to the historical low. The average global real yield to maturity is therefore deeply negative.
As a result of this extraordinary bond performance, the global volume of bonds with negative yields to maturity is currently $ 16.6 trillion, which is close to the all-time high of $ 17.0 trillion from August last year.
According to the average global bond yield to maturity and the global volume of bonds with a negative yield to maturity, bonds as a global asset class are clearly the most expensive in history. Therefore, their expected average annual performance over the medium term of the next five years is very weak.
Investment Strategist at Conseq Investment Management, a.s.