Bonds prove winners for first time since 2008
For the first time since the start of 2008, bonds were the only investments to provide positive returns amid renewed concern the global economy is slowing and as widening deficits in Europe threaten contagion.
Fixed-income assets — from Australian government debt to US Treasuries to global junk bonds — gained 0.7% last month including reinvested interest, according to Bank of America Merrill Lynch index data.
The MSCI All-Country World Index of stocks lost 1.1% including dividends while the Standard & Poor’s GSCI Total Return Index of metals, fuels and agricultural products fell 0.5%. The US Dollar Index dropped 0.3%.
“Concerns of an economic slowdown and renewed risks over Europe are the biggest drivers,” Anthony Valeri, a market strategist in San Diego at LPL Financial, which oversees $330 billion, said April 26 in a telephone interview. “There’s renewed concerns about Europe, and Spain in particular.”
Investors sought the perceived safety of fixed-income investments after US job growth in March failed to meet economists’ forecasts and amid growing concerns that European leaders will fail to manage their debt loads. Joblessness in the euro area probably rose to 10.9% last month, the highest since 1997, according to economists surveyed by Bloomberg.