Global bond markets may rebound, but a full return to pre-selloff levels appears unlikely as inflation pressures and elevated energy costs persist.
Recent easing in market stress triggered a rally across bonds and equities, yet investors see structural changes limiting further gains.
The FTSE World Government Bond Index fell sharply in March, marking its steepest monthly decline in over a year.
Analysts argue the recent shock has reshaped expectations, reinforcing concerns that inflation will remain stubbornly high across major economies.
As a result, expectations for aggressive interest rate cuts have faded, with central banks signaling caution amid ongoing price pressures.
Yields have retreated slightly but remain near recent highs, reflecting a shift toward a higher-for-longer rate environment.
Policymakers globally are prioritizing inflation control, with some already hinting at potential tightening if price pressures intensify further.
While short-term rallies are possible, bond markets now face a new equilibrium, where sustained declines in yields may be harder to achieve.
