Bond yields rise sharply across major economies – Fitch

Bond yields have risen rapidly across virtually all the major economies in the last two months, Fitch Ratings has highlighted in its latest 20/20 Vision chart pack.

Faster-than-expected increases in inflation and rapidly evolving outlooks for monetary policy in many countries have been key driving factors, but synchronized increases also show the strong global spill-overs from rising US bond yields.

Bond yields have risen by 50bp-100bp across many of the largest economies in recent months as inflation has continued to increase by more than expected and financial markets have reassessed short- and medium-term prospects for monetary policy.

But the breadth of increases in bond yields across geographies has also been striking with all the Fitch 20 countries covered in the chart pack except China and South Africa seeing yields rise. This speaks to strong global spill-overs from US interest rate shocks.

The chart pack also highlights the impact of supply-chain disruptions on activity growth in first quarter of 2022.
US GDP showed a surprising 0.4% quarter-on-quarter (-1.4% annualised) decline in quarter one 2022, reflecting volatility in inventories and net trade and eurozone Gross Domestic Product grew by only 0.2% quarter-on-quarter as high inflation squeezed real incomes and supply disruptions affected industrial output.

Fitch’s bi-monthly 20/20 Vision chart pack covers the 20 major economies that are the focus of Fitch’s Economics team’s global macro analysis and plots five years of high frequency economic data for 20 variables, with consistent coverage across each country.