According to a new report by Bloomberg, citing Bank of America projections, government bonds are heading for their worst performance since 1949, as losses mount in the face of aggressive central banks.

The report noted the escalating losses are revealing how far central banks like the Federal Reserve have moved away from the loose monetary policies of the Covid era, when banks lowered rates to near zero to support their economies through the pandemic. The reversal in policies has pounded everything from oil to stocks as investors begin to price in a coming recession produced by tighter monetary policy.

5-year bonds in the UK plunged the most since 1992 on Friday, in response to a massive tax cut plan rolled out by the government. In the US, 2-year Treasuries are in the longest losing streak since at least 1976, falling for 12 consecutive days.

Peter Boockvar, chief investment officer at Bleakley Advisory Group said, “Bottom line, all those years of central bank interest-rate suppression – poof, gone. These bonds are trading like emerging market bonds, and the biggest financial bubble in the history of bubbles, that of sovereign bonds, continues to deflate.”

The Fed just completed its third consecutive 75 basis point hike to the Fed funds rate, bringing its policy range to 3.25%. In its statement following he decision, the Fed indicated more rate hikes were coming, bringing the key interest rate above 4.5%.

Glen Capelo, managing director at Mischler Financial, said, “With more Fed rate hiking coming and quantitative tightening, as well as the possibly more government debt issuance down the road amid less Treasury buyers out there now, it all just means higher rates. The 10-year yield is definitely going to get closer to 4%.”

Bloomberg noted that the markets will likely face new volatility in the coming week as well, as inflation data is released, and Fed officials speak at scheduled events. In addition, the sale of new 2, 5, and 7 year treasuries are likely to also spur volatility in those benchmarks.