What happened to the “year of the bond” in the US?

2023 dubbed a “humbling year” for the US bond market, following initial optimism: Previously given the tagline “the year of the bond” by Wall Street investors, 2023 has turned into one of the toughest years ever for the market, with investors experiencing unprecedented losses due to interest rate fears, Bloomberg reports.

Why the original optimism? The common consensus for 2023 was that the economy would struggle with consecutive interest run hikes, in turn pushing up gains for bonds with the expectation of a relaxation of monetary policy around the corner

What changed? At its core, assumptions that a slow down in inflation would restrain yields did not play out throughout the year.Jobs and economic growth data for the US came in strong despite slowing inflation — presenting accelerating price growth as a real possibility. This sent yields soaring and the US Treasury market into the red for the year.

But a hard landing may still be coming: One analyst warned that a “hard landing is coming,” according to Bloomberg, adding that many on Wall Street view the possibility of the US economy falling into a contraction as a question of when and not if.

In the short-term: While the market briefly bounced back as traders looked for a safe investment amidst the war between Israel and Hamas, treasuries declined again on Monday as concerns eased over the possibility of more countries joining the war.

THE CLOSING BELL-

The EGX30 rose 3.5% at yesterday’s close on turnover of EGP 4.0 bn (83.5% above the 90-day average). Local investors were net buyers. The index is up 44.1% YTD.

In the green: Mopco (+20.0%), Abou Qir Fertilizers (+18.6%) and Credit Agricole (+6.7%).

In the red: Orascom Development (-1.5%), Palm Hills Development (-1.0%) and CIB (-0.8%).