Yields are at 5,000-year lows.
71% of the world’s government bonds are yielding less than 1%. 33% yield less than 0%. In a picture it looks like this:
Source: Bloomberg; JPMorgan Asset Management, BofA Merrill Lynch
Risk is being overlooked in HY bonds. Yields on high yield debt are close to the same yields on less risky loans. The chase for yield has driven investors to riskier asset classes.
I am anticipating a once-in-a-generation buying opportunity in HY bonds. While the trend this week is up, continue to invest with the trend. Move to the safety of cash or Treasury Bills when the trend crosses down.
Click below for a great chart showing what a 1% increase in interest rates does to bond prices. Show it to your clients!READ MORE