Energy prices have been the scourge of bond markets this year. Now investors worry that the next inflation spike will come from food. A "Super" El Niño, tight fertilizer supplies, attacks on shipping, and fallout from Europe's record hot summer could push the cost of everyday staples higher.

Even after the Federal Reserve raised rates and vowed to tame inflation, a sustained rise in food prices could create a new problem for bond portfolios. Investors see a risk that everyday staples will become more expensive, threatening the stability of bond holdings. The article highlights how agricultural and logistical challenges are converging to create inflationary pressure.

As central banks navigate tightening cycles, the focus shifts from energy to food as the next potential driver of price increases. This shift presents a fresh risk for global bond markets already reeling from previous selloffs. The convergence of climate events and supply chain disruptions suggests that food inflation may prove persistent.

Bond investors must reassess portfolios to account for this emerging threat to fixed income returns.