Bonds Offer Attractive Risk Return Despite Near Term Volatility

Global bond yields have surged to multi-year highs due to inflation concerns and geopolitical tensions in the Middle East, yet UBS maintains that quality bonds offer an appealing risk-return profile. Despite the volatility, the report remains positive on global equities, citing resilient growth and the capacity of markets to absorb new bond supply.

Key Takeaways

• 1.Quality bonds offer an attractive risk-return profile despite current yield volatility and record highs in global government bond yields.
• 2.Rising yields are unlikely to derail the ongoing equity rally as long as economic growth remains resilient.
• 3.Geopolitical tensions, particularly the closure of the Strait of Hormuz, are driving upside risks to inflation and volatility.

Table of Contents

• From the studio
• Thought of the day
• What to watch: 19 May
• Caught our attention
• Market update
• Appendix

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