Feeling the squeeze: monetary tightening has distorted bond markets
Rates investors had a reason to sweat this summer – and not just from record temperatures.
As the mercury climbed in the northern hemisphere, central banks turned up the heat on the fight against inflation. A series of rate hikes and the withdrawal of monetary support sucked liquidity from the bond market, creating trading conditions that were almost as sticky as during the Covid crisis in March 2020.
Market depth was “abysmal”, says Rish Bhandari, a senior portfolio manager at Capstone
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