Credit market hit by rate hike fears

Inflation and interest rate fears have sparked a fresh bout of bond market volatility as investors ha...

Inflation and interest rate fears have sparked a fresh bout of bond market volatility as investors have returned to the asset class in force. In the wake of the IMA’s April figures showing a £630m net inflow to bond funds – the biggest since 2006 – gloomy inflation stats have put an end to hopes for further rate cuts. Yields on US credit rose to a six-year high last week as a result. Inflation is widely expected to break the 3% barrier when stats are released on Tuesday, boosting pressure on the MPC to hit back with a rate hike. Managers remain cautiously optimistic however, resistin...