Investors return to government bonds
Deepening sell-offs in global equity markets have driven investors toward government bonds as a safe-haven asset.
The yield on the 10-year US Treasury note fell 10 basis points during Asian trading to 5.09%, its lowest level in three weeks. Treasury yields across other maturities also declined by at least 8 basis points, while government bonds in Japan, Australia, and New Zealand recorded gains.
Although elevated US inflation and growing government borrowing needs continue to pose risks to bond markets, major asset managers such as Pimco and Morgan Stanley believe the recent sell-off has created attractive valuations. An index tracking US Treasury securities has risen approximately 0.7% in October following a 2.2% decline in September. If these gains are sustained, bonds could record their strongest October performance since 2014.
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