With central banks in dovish mode, money managers face increasing pressure to reprise the yield-chasing mentality synonymous with quantitative easing, according to Gary Kirk, a founding partner at London-based TwentyFour Asset Management with $19 billion overall.
“This obviously tempts those investors holding cash to move along the maturity curve — or down the rating curve — to seek yield, which is once again becoming a scarce commodity,” he said. “It’s a classic late-cycle conundrum.”
Kirk is “resisting the temptation” to snap up longer-dated credit obligations that could succumb to defaults in a downturn and prefers duration bets in interest-rate markets.
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$10 Trillion in Bonds Are Losing Money
By Joseph Sherman
Written by Cecile Gutscher via Bloomberg
The stockpile of global bonds with below-zero yields just hit $10 trillion — intensifying the conundrum for investors hungry for returns while fretting the brewing economic slowdown.
A Bloomberg index tracking negative-yielding debt has reached the highest level since September 2017 as 10-year bunds trade in negative territory and the U.S. yield curve flashes recession warnings.
With central banks in dovish mode, money managers face increasing pressure to reprise the yield-chasing mentality synonymous with quantitative easing, according to Gary Kirk, a founding partner at London-based TwentyFour Asset Management with $19 billion overall.
“This obviously tempts those investors holding cash to move along the maturity curve — or down the rating curve — to seek yield, which is once again becoming a scarce commodity,” he said. “It’s a classic late-cycle conundrum.”
Kirk is “resisting the temptation” to snap up longer-dated credit obligations that could succumb to defaults in a downturn and prefers duration bets in interest-rate markets.
With central banks in dovish mode, money managers face increasing pressure to reprise the yield-chasing mentality synonymous with quantitative easing, according to Gary Kirk, a founding partner at London-based TwentyFour Asset Management with $19 billion overall.
“This obviously tempts those investors holding cash to move along the maturity curve — or down the rating curve — to seek yield, which is once again becoming a scarce commodity,” he said. “It’s a classic late-cycle conundrum.”
Kirk is “resisting the temptation” to snap up longer-dated credit obligations that could succumb to defaults in a downturn and prefers duration bets in interest-rate markets.