Goldman Sachs Exchanges Navigating the volatility in global bond markets
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Jan 21, 2025 
Jonathan Fine, the Global Head of Investment Grade at Goldman Sachs, teams up with George Cole, the Head of European Rates Strategy, to unravel the recent volatility in global bond markets. They discuss how inflation expectations and shifts in Federal Reserve policy are driving bond yield fluctuations. The duo explores investor sentiment, highlighting strong demand for corporate debt amid rising interest expenses. They also analyze the implications of U.S. economic growth on global yields and predict a complex landscape ahead for monetary policy.
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Bond Market Volatility Drivers
- Global bond yield volatility is driven by revised expectations on growth, inflation, and monetary policy, especially from the Fed.
- Increased bond risk premia are due to large sovereign bond supplies, which are harder to manage with rising inflation and growth.
Fundamentals, Uncertainty, and Fear
- Current market conditions are driven by fundamentals, near-term uncertainty, and fear.
- Uncertainty about government policy under the new administration adds to higher term premiums in treasury yields.
Monetary Policy and Volatility
- Market volatility stems from unexpected economic resilience despite higher interest rates.
- This led to questions about the true restrictive nature of monetary policy and the neutral rate of interest.