The 1994 bond market crisis, or Great Bond Massacre, was a sudden drop in bond market prices across the developed world.[1][2] It began in Japan and the United States (US), and spread through the rest of the world.[3] After the recession of the early 1990s, historically low interest rates in many industrialized nations preceded an unexpectedly volatile year for bond investors, including those that held on to mortgage debts. Over 1994, a rise in rates, along with the relatively quick spread of bond market volatility across international borders, resulted in a mass sell-off of bonds and debt funds as yields rose beyond expectations. This was especially the case for instruments with comparatively longer maturities attached. Some financial observers argued that the plummet in bond prices was triggered by the Federal Reserve's decision to raise rates by 25 basis points in February, in a move to counter inflation.[4] At about $1.5 trillion in lost market value across the globe, the crash has been described as the worst financial event for bond investors since 1927.[1][5]
^ abEhrbar, Al (February 3, 2013). "The great bond massacre (Fortune, 1994)". Fortune. Archived from the original on 2015-01-02. Retrieved June 24, 2017.
^Mackenzie, Michael (March 19, 2013). "Markets: The ghosts of '94". Financial Times. Archived from the original on 2019-01-11. Retrieved June 24, 2017.
^Mattich, Alen (December 29, 2010). "Investors Should Remember 1994". The Wall Street Journal. Archived from the original on 2010-12-31. Retrieved June 24, 2017.
^Hurtado, Robert (February 19, 1994). "Rising Interest Rates Create Predicament For Federal Reserve". The New York Times. Archived from the original on 2015-05-26. Retrieved September 17, 2021.
^Lebherz, James (January 1, 1995). "For Bond Investors, 1994 Was a Year to Forget". The Washington Post. Retrieved September 17, 2021.
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