Long-duration fixed income can play an important role in portfolios attempting to hedge against pension or long insurance liabilities, deflation, equity risk or simply taking a view that long-duration yields will decrease.
Insurers swapping out bond portfolios for higher-yielding credit instruments found deep in the capital structure.
Investors appear to be focused on the government’s pandemic-related stimulus and vaccination programs, and are questioning inflation expectations and the implications for real yields.
We believe this is an exceptional period in global market monetary policy. In real time we are witnessing several countries using yield curve control (YCC) policies in varying forms.