Will Higher Yields Derail Bond Investing

UBS believes the recent bond market sell-off is overdone and offers an attractive entry point for high-quality, short- to medium-duration bonds. They anticipate government yields will drift lower as markets adjust expectations for central bank policy tightening.

Key Takeaways

• 1.The recent sell-off in global bond markets offers an opportunity to lock in attractive yields, particularly in short- and medium-maturity quality bonds.
• 2.Markets appear to be overpricing the extent of future central bank policy tightening.
• 3.Emerging market bonds are favored as part of a diversified income strategy due to solid fundamentals.

Table of Contents

• Key message
• Government bond yields rose in the first half of 2026.
• We believe the sell-off in bond markets creates an investment opportunity.
• So, we see opportunities to lock in yields.
• New this week
• One liner
• Did you know?
• Investment view
• Non-Traditional Assets
• Disclaimer

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