Fitch expects 'Bond Bubble' carnage when rate cycle turns – The Telegraph

Fitch expects 'Bond Bubble' carnage when rate cycle turns – The Telegraph

Yields on 10-year US corporate bonds have fallen to the lowest levels in history as a result of central bank liquidity, halving from 4pc to well under 2pc since early 2011.

Fitch said investors could cope with a gentle reversion to higher rates, but a “sudden rise” would devastate the portofolios of life insurers, pension funds, and other fixed-income institutions.

“If interest rates were to revert rapidly to early-2011 levels, a typical BBB-rated US corporate bond could lose 15pc of its market value, with longer duration bonds [30 years] suffering a 26pc loss,” it said.