Bond Investors Are Settling for Too Little
Bond investors simply aren’t paid enough for the brewing credit trouble and inflation risk they’re taking.
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Investors clamoring for extra yield are taking on more inflation and debt risk than they’re paid for.
Fixed income investors are starved for return again. This isn’t just a US phenomenon. Apollo Global Management Chief Economist Torsten Slok recently determined that 90% of the universe of global public bonds yield under 5%. That leaves just about 2% after accounting for inflation. Even in the safest of assets, like US Treasuries, investors have traditionally been rewarded more for less risk.