In Short: Global developed bonds in wait-and-see mode


On the heels of good performance so far this year, the international developed bond market was mostly range-bound in May due to two opposing forces. On the one hand, hawkish comments by the Federal Reserve helped to drive yields higher ahead of its June 17 policy-setting meeting. On the other hand, the referendum just a week later on whether or not Britain will leave the European Union (Brexit) encouraged investors to remain anchored in the relative safety of bonds. The conflicting factors resulted in a barbell structure, and we expect the sideways action to continue until the Fed meeting and Brexit have taken place.