Investing.com – Global government bonds suffered their worst losing streak since 1949, a report from investment bank Bank of America said.
The bank warns that the collapse of bonds will lead to cases of individuals and institutions defaulting on huge transactions, and their inability to pay, and this will have a contagious effect, as once a single country defaults, the deficit will be transmitted to all countries (which is known as credit disasters). It will also lead countries to liquidate their assets.
This is what the Bank of Japan did yesterday, for the first time in 20 years, the Bank of Japan sold its 10 year holdings to provide dollar liquidity to the markets, and save the yen from deteriorating against the US, which rose today to a new two-decade high.
Bank of America (NYSE:) predicts that inflation, rising interest rates and recession shocks are not over yet, the bond collapse in recent weeks means credit spreads widen, stocks decline, and these destructive moves continue for some time.
The Bank of America Bull and Bear Index indicates “extreme pessimism” with investor sentiment dropping to its lowest levels since the 2007-2008 global financial crisis.