“Surprise!” This word probably best describes the (wacky) world of global fixed-income markets over the past 12 months. From the near-shocking continued appreciation of long-term US Treasuries and German bunds; through the continued flood gate of new corporate issuance; past the level of risks investors seem willing to take on in order to harvest precious basis points of yield; to the resurgence of emerging markets; 2014 has not obeyed the conventional wisdom of late 2013.
About the only thing that remains true is the scrutiny and criticism of global central bank policy. Sans this, the fixed-income axis of monetary policy, all else seems to be a study in punchlines delivered at the expense of fixed-income investors.
Here are some key stories that describe the big surprises of 2014 thus far:
“Central Bankers Face ‘Confidence Bubble’” (Financial Times)
“Subzero Eurozone Yields Point to ECB Power, Problems” (Wall Street Journal)
Surging Corporate Issuance
“Firms Near Borrowing Record” (Wall Street Journal)
“Low Rates Spur US Corporate Debt Sales” (Financial Times)
“Indonesia Plans Euro, Yen Bond Sales to Meet Record Target” (Bloomberg)
“South Africa to Issue Maiden Sukuk” (Financial Times)
“Big Investors Snap Up Junk Bonds” (Wall Street Journal)