Hard to see those words in the title of ANY research report and simply let it slide …
DBs 1st CoTD for the new year puts some context to asset class performance in the year just past. Clearly I’m going to show preference and highlight what its shows of rates … in this case, $AGG,
… In terms of bonds, for the Barclays Global Agg Index (the broadest global measure of all bonds) 2021 was the worst nominal year since 1999 (-4.7% last year). By my calculations on a real basis it was the worst since data starts in 1991 if you use US inflation as the benchmark.
So, although bond markets frustrated the bears at times in 2021 it was a very bad year overall in both nominal and especially real terms. Both the back end and especially the front end sold off hard.
The multi-trillion dollar question for 2022 is whether yesterday’s first day of the year rout (10yr UST +11.8bps) is a taster of what’s to come. Our rates strategist Francis Yared thinks so. He targets 2.4% on US 10 year yields by H1 2022 and 0.3% on 10 year bunds. See his team’s fixed income outlook here and don’t forget our comprehensive performance review with the link at the top.
So the lesson or moral of this visual / story is — RATES QUESTION remains and the only / ALWAYS ANSWER IS — HIGHER IN THE NEW YEAR and that while USTs weren’t good in the year just past - it’s going to be WORSE. ALSO noted 2021 could have been far worse, for example, the BOVESPA …?