A Banner Year for Government Bonds

For the first time since the financial crisis in 2008, all 26 government bond markets tracked by Bloomberg and the European Federation of Financial Analysts Societies are poised to deliver a winning year. Chalk it up to a government bond-buying blitz by major central banks and relatively low inflation in the world’s biggest economies.

Most of the biggest gains came in bonds of countries at the center of Europe’s debt crisis, including Ireland, Greece, and Italy. Portugal, which depends on aid to stay solvent, had the best-performing bonds, up 45 percent. Japan, with the highest debt level in the developed world, was the worst performer, returning 1.7 percent, trailing Switzerland and the U.S. at 1.9 percent. “The longer-term bull market in government bonds is still intact all over the world,” says Howard Simons, a strategist at Bianco Research.