If we turn back the clock to before the recession, we find that US debt levels weren’t this high, and unconventional programs like quantitative easing helped the economy recover from the Great Recession.
Apprehensions over climate change, an emphasis on global pension funds over the integration of ESG in their investments, and new markets will fuel demand for this type of bond.
After the release of the FOMC’s November statement, Bill Gross said that monetary policy in the United States is steadily moving toward normalization, though its pace is slow.
Bernstein asked a rhetorical question: “Could there be anything that suggests extreme risk aversion more than the increasing proportion of global sovereign bonds that have negative yields?”
According to Lipper funds flow data, investment-grade bond funds saw net inflows of $3.1 billion—the highest inflows YTD (year-to-date)—during the week ending April 27.
If spreads widen further, high-grade bonds will become more attractive because yields and prices are inversely related. A rise in yields indicates falling prices.
Bullard went on to talk about the international economy from an alternate view. Under this view, most features characterizing the economy remain the same as under the traditional view—except one.
Examining credit spreads gives investors an idea of how cheap (a wide credit spread) or expensive (a narrow credit spread) the market for a particular bond category or a particular bond is.
