As global quantitative easing begins to withdraw from the market’s economic system, knock-on effects are being noticed. This could mainly impact the high-grade credit markets in Europe, as regional central bankers start to restrict the free-flowing supply of corporate bond buying in the region.
The good news for high-grade corporate bondholders in a March 2018 Bank of America Merrill Lynch US Credit Investor Survey shows that concerns regarding “asset bubbles” are receding.
BAML’s High-Grade Strategy team of Hans Mikkelsen, Yuri Seliger, and Yunyi Zhang see a “compression trade” in the making. High-grade corporate bond investors in the BAML survey are reducing their positioning as investors focus on central bank positioning. The study...
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