BofA says investors who piled into European and UK government bonds in recent
months may now regret those long-duration positions after a sharp sell-off. Its
survey shows respondents turned more pessimistic on rates but nonetheless added
to and held long-duration exposure since early August. A surge in energy prices
raised inflation concerns and pushed yields sharply higher, with a global bond
sell-off amplifying the move. Strategists including Ralf Preusser wrote Friday
that the gap between investors’ duration exposure and their rate views is at a
record high, and buyer regret helps explain this week’s severe repricing in UK
gilts and German bunds, even as most investors still expect the ECB may need to
reverse policy next year.
