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Several US corporate bond indicators have reached or are approaching new lows this week as the debacle in the UK bond market and worries about US inflation hurt global debt estimates.

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The BlackRock iShares iBoxx $ Investment Grade Corporate Bond ETF — a large exchange-traded fund that tracks the investment grade U.S. corporate bond market — fell to a low of $101.05 on Tuesday, its lowest level since 2009.

Its high-yielding counterpart, BlackRock’s iShares iBoxx $ High Yield Corporate Bond ETF fell to $70.92 on Monday, just a few cents off a new low since March 2020. It traded at around $71.9 on Tuesday.

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Yields on long-term US Treasury bonds, which move inversely with prices and tend to affect other debt markets, hit multi-year highs on Tuesday, with a sharp sell-off in the UK bond market fueling widespread market volatility.

The Bank of England said it would be buying up to £5bn of inflation-linked debt a day starting Tuesday through the end of this week to stop the bond market from collapsing. The intervention follows the government’s tax cut plan, which rocked markets late last month.

Governor of the Bank of England Andrew Bailey

“It can be assumed that the fiscal drama in the UK has exacerbated the difficulties in a market that was already under pressure from rapid growth in yields to multi-year highs,” Capital Economics said in a research note on Tuesday.

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“There appears to be a self-reinforcing trend at work here: higher and more volatile yields drain liquidity, causing even more volatility. This dynamic seems to work elsewhere as well.

New York Stock Exchange traders

Investors are also looking forward to US inflation data for September this week.

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The indicator has caused big moves in the markets this year as inflation reached its highest level in decades, forcing the Federal Reserve to step up its monetary policy, tightening it much more aggressively than many investors expected.