| Videos | Channels | Search |
Why there's an "overwhelming" interest in corporate bonds
There's not just a lot of interest in corporate bonds - there's an overwhelming interest in corporate bonds so far this year, according to Saxo Bank's Simon Fasdal.
He explains a combination of very low inflation - which brings us
very low core yields - and improvements in the eurozone economy "bring in fertile conditions for
corporate bonds". The encouraging signs of better global growth means there are fewer risk factors, and lower risk premiums for investors.
He adds that the light impact of
the beginning tapering on core yields have surprised the market a bit, and we
see some relief rally on the back of that.
Meanwhile, he says that with the eurozone's record low core
inflation of 0.7 percent, the biggest risk for the euro area is a potential Japanese style deflationary trap. He expects the ECB policy to be dovish when it meets on Thursday but that it will take action going forward, and this will be supportive for
corporate bonds.
Bearing this in mind, investors
needn't fear higher yields at the moment, according to Simon.
01:25 minutes
Tags: bearish, bond market, bond yields, bonds, business, corporate, corporate bonds, corporate sector, deflation, dovish, ecb, ecp policy, em, em bonds, emerging market bonds, emerging markets, equities, eu core inflation, eu debt crisis, europe, european central bank, eurozone, eurozone euro, inflation, interest rate, investing, japan deflation, low inflation, qe, risk, risk premiums, saxo bank, saxo tv, simon fasdal, taper, tapering, trading, trading risks, tradingfloor.com, video, yield