Iran War Triggers Stagflation Panic, Global Bond Market Loses Over $2.5 Trillion in March

On March 23, according to Wall Street News, stagflation concerns triggered by the Iran war have caused global bond values to evaporate over $2.5 trillion in March, potentially marking the largest single-month decline in nearly three years.

As oil prices surge and accelerate inflation expectations, bond prices have fallen sharply, eroding the pricing of fixed income assets. While the contraction in the bond market is smaller than the approximately $11.5 trillion loss in global equities, this trend remains abnormal;

Because typically, bonds appreciate during geopolitical turmoil due to their safe-haven properties, but current inflation pressures have dominated market pricing logic, breaking the traditional safe-haven function of the bond market.

Analysts point out that this round of bond market decline is primarily driven by sovereign bonds. On a percentage basis, the global sovereign bond index fell 3.3% in March, while the corporate bond index fell 3.1%.

According to Bloomberg's aggregate index, the total market value of government, corporate, and securitized bonds has declined from nearly $77 trillion in February to $74.4 trillion, potentially marking the largest decline since September 2022, when the Federal Reserve was in an aggressive rate-hiking cycle.

Furthermore, amid U.S. Treasury yields declining for three consecutive weeks and climbing to multi-month highs, markets have begun pricing in expectations that the Federal Reserve may restart rate hikes due to inflation pressures.

Currently, this trend of rising Treasury yields has spread to global markets. In Asian markets such as India, Japan, and South Korea, government bond yields have all risen in tandem;

Australia's 10-year yield climbed to the highest level since 2011 on Monday; New Zealand's sovereign bond yield has also touched the highest point since May 2024.

Overall, current market movements are highly similar to the 2022 inflation shock phase, when global bond markets similarly faced pressure from rapidly rising yields.

Looking ahead, if energy prices remain elevated, major global central banks will be forced to navigate a difficult balance between slowing growth and elevated inflation, and bond markets may face sustained valuation repricing pressure.

#滞胀 # Bond Market