Bloomberg data shows that global government bonds are projected to experience a maximum drawdown of approximately 4.2% in 2026, with bonds maturing over ten years facing a 7.8% drawdown, significantly lower than the 23.3% and 35.1% drawdowns in 2022. However, this only compares the peak and trough of a single year and does not indicate that previous losses have been recovered.
Using global government bond benchmarks as of early September, their five-year cumulative return was still approximately -16.6%, with the actual loss after accounting for inflation being even greater. Meanwhile, the IMF points out that since 2020, stocks and bonds have been more likely to fall in tandem under market pressure, weakening the hedging capabilities of bond portfolios. Currently, global government bond yields have risen to approximately 4.25%, and higher coupon rates are improving future holding returns; the truly vulnerable segment remains the long end, whose prices continue to be squeezed by inflation, fiscal supply, and rising term premiums.
