Global bonds went on a wild rollercoaster ride last week, with the price swings being particularly abrupt in the U.S. and German markets, which have long been viewed as the safest and most liquid in the world.
The German 10-year Bund yield ended at 0.84 percent last Friday, down from Thursday's high of nearly 1 percent, following robust U.S. employment data. The 10-year U.S. Treasury yield climbed to 2.43 percent, marking its highest level since October 2014.
Analysts attribute the turbulence in global bond markets to emerging signs of firmer economic activity and expectations of higher inflation. Meanwhile, comments from Mario Draghi, the President of the European Central Bank (ECB), on how markets will need to "get used" to periods of volatility exacerbated the selloff.
"We would characterize this bond selloff as made in Europe. Apart from weakness in Europe, the comments from ECB didn't help. Over the past few sessions, we've seen fairly consistent rises across European government bond markets and that's spilled over to the U.S." said Anthony Valeri, senior vice president of fixed income research at LPL Financial.
Volatility in the bond markets transcended into equities, knocking down the pan-European Euro Stoxx 600 Index by 0.9 percent and leading Wall Street shares to finish narrowly mixed on Friday.
With bond markets erratic, tell us where you are putting your money:
