Depressed bond yields won’t last long
Marcus Ashworth | 04 Jan 2019 00:30
The beginning of 2019 has seen a “risk-off” flight into high-quality government bonds. But the resulting super-low yields probably won’t stay like this for long.
They’ll make it too tempting for governments to issue as much paper as possible. And this won’t just apply to large-scale syndicated bond deals, but to higher-risk longer maturities as well.
This yield collapse is a global phenomenon driven by a 40 basis point shift lower in US Treasuries over the past quarter.
Europe has followed, although not quite in lockstep. The 10-year bund yield is sitting near its April 2017 level of 15.6 basis points.
Going below that would portend a shift back into the negative territory seen between June and October 2016.
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