The global bond market sell-off has erased all of this year's gains as historic market moves from Germany to the US and Japan caught traders off guard.
After being up as much as 2.3pc as of mid-April, the Bank of America Merrill Lynch Global Broad Market Index of bonds, which as a total face value of $41 trillion, is now down 0.4pc for the year.
The decline in the price paid for Irish Government bonds pushed yields to 1.5pc for 10-year debt yesterday, the highest levels since before the start of the year.
The decline in bond prices has left investors nursing big losses, but in part reflects optimism about the world economy.
Bond traders have been caught off guard by signs the global economy is likely to avoid mass deflation and by improvement in the Eurozone's economy. That left little incentive to own debt securities with yields that in some cases are below zero. Fixed income continued its slide yesterday, a day after European Central Bank President Mario Draghi said investors should get used to the heightened volatility they've seen in recent weeks. "This is sheer panic in the market from the standpoint of what's been happening in Europe," said Thomas di Galoma, head of fixed-income rates and credit at ED&F Man Capital Markets in New York. "Most of Wall Street is guarded here as far as taking on new positions."
Like many of his peers around the world, di Galoma said he has had to cancel meetings as yields rose ever higher through key levels that many thought would attract demand, but didn't. Take the yield on the benchmark 10-year German bund: it soared to as high as 0.995pc yesterday from as low as 0.049pc on April 17,
"Things went quite badly after Mr Draghi's comment that markets should get used to more volatility," said Antonio Torralba, head of flow rates trading at Banco Bilbao Vizcaya Argentaria in Madrid.
"I thought it was a quiet day but in the end it wasn't."