Interesting times for global bond market

The bond market has not been immune to the global economic crisis. Investor confidence has been shaken. However, the overall lack of liquidity has increased the importance of bond markets as a source of finance for companies and governments.

Bond markets are certainly anything but dull at the moment. Like equities, bonds reacted favourably to better than expected employment and economic data released by the US in early August. This boosted investor confidence that the economic recession may not be quite as deep and prolonged as first feared. These data have put some downward pressure on treasuries across the curve although the market remains somewhat nervous about digesting the auction of $75 billion in new supply of US bonds in